ESPN and the future of Australian sports rights
Today ESPN is set to become the biggest TV sports network in Australia when its two local channels, containing thousands of hours of live sports, move on to Disney+.
In joining its parent company’s streaming service, ESPN has effectively increased its Australian reach by an estimated 3.1 million subscribers.
Add 1.5 million Kayo Sports subscribers, 1.3 million Fetch TV viewers, and a huge chunk of the 1.4 million Foxtel subscribers who pay for sports, and ESPN has suddenly become the biggest TV sporting network in Australia, dwarfing the likes of Stan Sport and Optus Sport.
The obvious question is: will it start chasing Australian sporting rights?
ESPN addressed this during a media call on Tuesday morning, ahead of today’s launch. The network’s head of channels and marketing, Patrick Bour, said it would “absolutely” bid on a tier one Australian sport, if the circumstances line up. “The value has to be right for the business. If that opportunity presents itself there, of course.”
The next big bidding war for local sports is already under way. The Australian Rugby League Commission is hoping to shore up the next broadcasting deal for the NRL before the middle of the year, despite it not coming into play until the 2027 season.
ARLC Chair Peter V’landys has been very vocal about locking in “a record deal” before the end of June, telling News Corp papers he is looking for a deal bigger than the current $4.5 billion, seven-year contract the AFL has secured.
Bour confirmed it hasn’t spoken to the ARLC about a potential NRL broadcasting deal, despite V’Landys telling media its parent company Disney “has come out and said they are interested.”
ESPN would be an attractive home for the NRL competition, especially with V’landys floating the possibly of mirroring the NFL’s approach in the US of splitting its broadcasting rights between various free-to-air, cable and streaming services.
“If and when they want to have a conversation with us, we will of course talk to them,” Bour said. “Why wouldn’t we? We’re in the sports business.”
V’landys first floated the idea of splitting the broadcasting rights at the NRL’s annual general meeting in late February, saying “we have to look at all formats and that’s one of them.
“Ideally we’d like it all in the one, but if you look at the NFL and how they do it, and they’re very successful, we’ll analyse it and watch it,” he said. “Whatever maximises our return.”
Lachlan Gepp is a media and sports rights lawyer at Addisons. He was a lawyer for the NRL, and worked on the previous two broadcast deals. Then he moved to Sportsbet, where he was on the other side of negotiations, working on the major partnership agreements that exist between the wagering company and the league.
Gepp believes that any Australian sport commanding a similar deal in 2025 to that of the AFL will be challenging. “It’s a very different negotiation landscape and media landscape now, than it was when the AFL did their deal at the end of 2022,” he tells Mumbrella.
He explains that looming gambling advertising restrictions are making potential broadcast suitors very nervous about the ability to recoup rights fees through advertising revenue from wagering operators. In addition, the financial resources which major broadcasters such as Seven and Nine have already outlaid on sports rights (AFL, cricket, Australian Open, rugby union), means they may be restricted in respect of further investment in the free-to-air rights, which would impact competition.
Seven is going all-in on the AFL.
Hence, V’landys’ current beating of the drum, regarding a fragmented model.
“I think he knows it’s going to be more challenging than ever,” Gepp said. “The league is in the best state it’s ever been in as a football product, and they’re in rude financial health. But, it’s probably the toughest media landscape that they’ve ever been in.
“So, he needs to create competitive tension to drive the price up.”
Gepp doesn’t believe that any overseas streaming services such as Netflix or Amazon Prime will truly come to the bidding table, given they are highly commercial models, driven by cost-per-unit metrics in global markets. ESPN is best placed to bid, he feels, due to today’s Disney+ expansion, but Gepp predicts they’d only be interested in a very small package of rights which may not be appetising for the NRL.
Any comparison to the NFL’s broadcasting model is flawed, he said, because it fails to account for the international appeal of the US sport. Netflix signed a deal to broadcast the two Christmas day matches, for A$240 million a year, but the sport is watched in over 100 countries. The NRL is a native Australian sport, with an Australian and NZ market.
“I don’t think that they’re going to seriously play a role other than as a stalking horse by the league,” Gepp predicts of the overseas streamers. “Mainly because, one, they can’t get a package of rights that is exclusive enough or big enough or going into a market that’s big enough for them to justify the spend and move the needle — it’s a very different case to the NFL example.
“And secondly, I don’t think the league truly wants that either, because that just upsets their traditional broadcast model – and they’re comfortable and familiar with how to commercialise a traditional broadcast model.”
Gepp says the NFL scenario, with a number of rights holders is a “much more sophisticated model to monetise” and likely to be unattractive to the league.
“The NRL like their traditional model where they’ve got a couple of broadcasters,” he explains. “They can confidently go and sell partnerships in Australia into that model, and their potential sponsors or existing sponsors are very comfortable with those broadcasters and the return on investment which they provide. They know how their sponsorship gets agitated and ventilated. Whereas if you’ve got this model that’s got broadcasters everywhere, it’s hard for sponsors to wrap their head around and for the league to manage production quality and deliverables.”
The State of Origin is “the jewel in the crown”, according to ARLC chair Peter V’landys
Gepp’s prediction is that the NRL may split the free-to-air rights between two broadcasters to maximise revenue. One would air the regular season and the grand final, and the other would have exclusive rights to the State of Origin, which V’landys called “the jewel in the crown” at the league’s AGM.
Foxtel or DAZN will remain the exclusive subscription TV broadcaster, and will push for every game, live, with their own broadcast feed and exclusivity on a Saturday – much like the deal they have struck with the AFL.
In addition — and this is where the deal may expand from the more traditional models — one of the wagering companies may do a smaller vision deal with the NRL where they can use highlights reels from games on their own platforms, to hype up the weekends’ wagering opportunities.
But, it will be gunning for as few broadcasting partners as it can manage.
“The NRL will continue to make noise about an increasingly fragmented broadcast model to create competitive tension. But in truth, the league would prefer to have the most limited model they can achieve, that still gets them a record price.”
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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