SWM Inflation reaches stratosphere in AFL sporting broadcast cope with Seven West Media and Foxtel

That is significantly so given rival bidder 9’s free-to-air tv service would have been constrained schedule-wise given it already holds the NRL broadcast rights. (9 is the proprietor of this masthead).

Paramount, which owns Channel Ten and streaming service Paramount Plus, was the aggressive counter-bidder within the course of that pushed the Foxtel Group and Seven to pay up.

For Seven, the price of the AFL will likely be $1.3 billion over the lifespan of the contract, or a mean $189 million a yr, in response to quantity crunching by funding financial institution Goldman Sachs.

That compares with Seven’s present contract, which runs between 2020 and 2024 and has a $146 million common annual worth, in response to the Goldman analysts. In different phrases, the present deal represents 30 per cent inflation.

That stated, Stokes specifically has lengthy been a vocal true believer within the worth of marquee sporting occasions.

And whereas Goldman Sachs has marginally downgraded Seven’s 2025 earnings on the again of the upper value of the AFL, it’s not significantly important.

Foxtel will in the end bear the brunt of the upper AFL prices. On the face of it, the competitors warfare in media has moved from free-to-air networks to streaming companies.

However the conventional demarcation between free-to-air broadcasters and pay-for-services has turn into more and more blurred.

The free-to-air networks’ digital channels and broadcast video on demand (BVOD) streaming companies have drastically enhanced their programming bandwidth and their choices to broadcast a bigger variety of video games, and offered them with one other supply of promoting income.

And whereas development in these areas has helped free-to-air networks offset the long run structural decline in linear tv, it hasn’t offered the capital to fund sports activities rights inflation or compete with worldwide streaming companies.

Anti-siphoning legal guidelines, which dictate that sure video games have to be obtainable free, present a stage of safety for the tv networks towards worldwide streaming giants.

However within the closing evaluation, there must be a monetary return for paid and free programming.

The wealthy AFL bidding warfare comes at a time when the economic system is broadly anticipated to gradual as rising rates of interest will chew into shopper and enterprise spending.

In such an setting, stress will mount on all media corporations that depend upon promoting income.

In a observe from Macquarie on Wednesday, it informed traders in reference to conventional media corporations: “Our view on the promoting markets stays adverse regardless of comparatively constructive buying and selling updates over the previous couple of weeks. We anticipate the cycle to show within the first half of calendar 2023.”

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