Nine, Fox top "must-win" NRL rights fight

The Nine Network has secured its future by nailing down the NRL broadcast rights in a joint $1 billion deal announced with Fox Sports.

The Australian Rugby League Commission (ARLC) announced on Tuesday that Nine and Fox Sports had secured the NRL free-to-air and pay TV broadcast rights respectively, in a five-year deal worth $1.025 billion.

Nine chief executive David Gyngell says the deal, in which incumbents Nine and Fox Sports trumped bids from the Seven and Ten networks, had been a must-win for Nine but that the price is "fair and reasonable".

"We have certainly stepped up and paid as much money as we could," Mr Gyngell said.

Mr Gyngell also said the deal - the most valuable in the history of rugby league broadcast rights - would be revenue positive.

"This is an exclusive sports rights' deal," he said.

"In this deal, we are the only free-to-air network to have exclusive sport at prime-time."

The agreement comprises $925 million in cash, of which $90 million is paid at the start of the 2013 season, and $100 million in advertising.

Nine will show three free-to-air matches weekly, while Fox Sports will have five a week on pay channels.

Nine will also have State of Origin games and an evening Grand Final.

NRL rights were last secured by Nine and Fox Sports in 2005 in a $500 million, six-year deal.

Nine Entertainment, owned by private equity firm CVC, has about $3.6 billion of debt due for refinancing in 2013 and 2014.

Media buyer Harold Mitchell, executive chairman of Aegis Media, said Nine had not overpaid and would meet its share of the $1.025 billion price tag through advertising revenue.

"Advertising volume hasn't been growing but it hasn't been collapsing," Mr Mitchell said.

"Key to any network's success will be sports programming and (Nine) are a stronger network with it than without it.

"This secures their future."

Mr Mitchell said the $1 billion deal was a positive sign for Australia's advertising market, which was in "unbelievably good shape compared to the rest of the world".

Morningstar head of equities research Peter Warnes said Nine had paid a fair price but also had to secure the rugby league as a key driver of audience numbers.

"Where would Nine be if they lost it? They had to win it," Mr Warnes said.

"I think they've probably paid a fair price.

"Had it been $1.2 billion, it would have been over the top."

Ten Network had been rumoured to have secured a package of NRL games ahead of Tuesday's announcement but is now without either rugby league or AFL, the rights to which are held by Seven.

Mr Mitchell said the NRL deal "places Ten in a difficult position".

QUOTES

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.