Foxtel back in the mix for Rugby Australia rights
Foxtel, the Australian pay-television operator, has submitted a bid to renew its rights deal with Rugby Australia as it looks to continue its 20-year relationship with rugby union in the country.
RA’s previous five-year rights deal, for 2015 to 2020, with Foxtel and commercial broadcaster Ten Network was worth a total of A$285 million ($201 million).
Under the deal, Foxtel paid between A$30 million and A$40 million per year for the rights to broadcast the Super Rugby club competition, The Rugby Championship for national teams, other Australian test matches and domestic games.
Industry sources have told the Sydney Morning Herald that Foxtel this week submitted a bid to retain the same rights for the next five-year cycle, but at a lower cost.
If successful, the bid will end a standoff between the broadcaster and RA over continued TV coverage.
Last November, the broadcaster had its A$35 million per year renewal offer rejected by former chief executive Raelene Castle in favour of a media rights tender in February.
Castle engaged media rights organisation Media Rights Value to help negotiate and maximise the value of RA content in the hope it would trigger a bidding war between broadcasters, but when this failed to materialise, she was forced to resign from her post.
The tender was then halted due to the coronavirus pandemic, allowing broadcasters to secure revised deals with other codes and weakening RA’s bargaining position.
It has since been reported that the next RA broadcast deal is likely to be worth no more than A$20 million per year, representing a A$15 million shortfall on the previous Foxtel offer and down from the previous deal with Foxtel and Ten worth A$57 million per year.
However, there is uncertainty over the future of Super Rugby, with the South African Rugby Union having this week announced its intention to move the country's four teams to an expanded version of Europe's Pro14.
This came amid plans for an alternative southern hemisphere clubs competition in 2021 involving only sides from New Zealand, Australia and potentially one from the Pacific Islands.
However, discussions had foundered over the level of representation, and, with ongoing concerns over travel restrictions amid the pandemic, New Zealand Rugby confirmed yesterday that Super Rugby Aotearoa, a domestic five-team competition, would be repeated next year.
Australia has also been staging its own competition, Super Rugby AU, in 2020, and this is likely to return in 2021.
Foxtel’s bid follows an offer from Ten to to renew its free-to-air rights deal with RA to show matches of the national team, the Wallabies.
The commercial broadcaster reportedly offered less than its current payment of about A$3.5 million per year, with the length of the deal and potential to pick up new game formats still to be decided.
Amazon, the online retail giant, which this month secured the rights to the special 2020 Autumn Nations Cup in Europe, has also indicated its interest in the rights to RA, but is yet to formally submit a bid, according to Herald sources.
Securing a new broadcast deal is crucial for the governing body as it looks to recoup heavy financial losses in the last year.
Last month, long-standing sponsor Qantas, the Australian airline, ended its sponsorship deal after 30 years.
In June, RA was forced to cut 40 per cent of its staff as part of emergency measures put in place to withstand the financial effects of Covid-19 having announced losses of A$120 million the previous month.
It also asked remaining senior staff to take a permanent 5 per cent cut to their base salary, while a further 30 contractors and casual workers had their roles terminated to reduce the company’s wage bill by A$5.5 million.
Last month, RA hired Adam Foulsham, an experienced financial and operational executive, as its new chief operating officer tasked with reducing operating costs by A$15 million to counter the expected shortfall from a future broadcast deal.
Given the impact of the pandemic on its business, Foxtel has already secured a discount on its rights deals with the Australian Rules football's Australian Football League and National Rugby League. It is also in discussions with Cricket Australia over reducing its rights fees for this year’s summer schedule.
In August, Robert Thomson, global chief executive of Foxtel’s parent company News Corp, said the broadcaster plans to save at least A$180 million from reduced sports broadcast rights fees over the next three years.
Foxtel has already scrapped its A$57 million per season deal with soccer's Football Federation Australia for rights to the men’s A-League and women’s W-League, replacing it with a one-year broadcast deal reportedly worth almost half its pre-existing agreement, which was due to expire in 2023.