The Nine Network and Fox Sports will reportedly pay up to $1 billion to retain broadcast rights to the NRL; double the amount previously paid for the rights.
Not a bad price, considering the turmoil and uncertainty surrounding sport broadcast rights and the media industry generally.
The only extra sweeteners to this new deal seem to be the granting of digital rights for Fox Sports, allowing it to stream broadcasts to tablets and IPTV rights. No doubt the newly formed Australian Rugby League Commission is quietly satisfied with the agreement.
The deal struck by the ARLC is notable not just because of its sheer magnitude, but because it's managed to do it at a time when there are big question marks over the future direction of broadcasting regulation in this country.
For instance, the proposed anti-siphoning reforms which were submitted to Parliament in March have languished at the second reading stage. The reforms, if introduced, will include the "use it or lose it" mechanism, long called-for by the pay TV industry and will provide the much-need clarity with respect to broadcasting of listed events on free-to-air digital channels.
Presumably the broadcasting rights contract with the ALRC allows for any change in law and any "anti-siphoning rules" compliance issues could be addressed between the various free-to-air terrestrial channels of the Nine Network.
Another industry bombshell that has threatened to irrevocably change the way sports broadcast deals are brokered in Australia was the Federal Court's decision in February to allow Optus to continue its " TV Now" service.
"TV Now" allows users to record and watch free-to-air television broadcasts on a "near-live" basis. In a decision that has outraged sports rights-holders and surprised television broadcasters, the Federal Court held the "TV Now" service does not infringe copyright in the original terrestrial television broadcast of certain football and cricket matches and for which Telstra owned the exclusive internet rights.
For many in the industry, the decision simply confirmed the reality of broadcasting in a converged environment: free-to-air television rights and live-streaming internet rights will become one and the same (to the user).
However, for the rights-holders of Australia's biggest sports a potentially nasty commercial implication loomed. Why would broadcasters pay a premium for live broadcast rights if the event or content is available on another platform on a near-live basis?
Despite the hype the decision does not appear to have hampered the ALRC in negotiating its lucrative deal with Nine and Fox Sports, which includes new digital and IPTV rights enabling Fox Sports to deliver live streaming of matches to iPads.
In any event, the Optus TV Now decision is being appealed and there's a good possibility it will be over-turned and the status quo returned. (The application for special leave to hear the appeal is rumoured to be heard in early September 2012).
The Optus TV Now decision was also the catalyst for the Australian Law Reform Commission to launch an inquiry into copyright laws (the Issues Paper for which was released this week and submissions are due by 16 November 2012 – yet another emerging issue the media industry may need to grapple with.
But neither "TV Now" nor anti-siphoning reforms are the biggest disruptions facing the industry. That fame is reserved for the recommendations of the Convergence Review Committee's final report.
There has been little comment from the Government as to if and how the Convergence Review recommendations will be adopted. If they are implemented, there is the potential for regulation of broadcasting in this country to be turned on its head.
Many of the recommendations would see the existing regulation of traditional media extended to emerging media services, such as IPTV service providers (to be known as "content service enterprises").
It is these content service enterprises that are the likely to be interested in snapping-up the residual digital rights (as opposed to the streaming rights granted to Fox Sports in the ARLC deal), such as on-demand "download to rent" or "download to own" rights, highlights packages, clips etc.
Increased regulation has a habit of stifling new and emerging services and may deter investment in these services in Australia. What also remains unclear from the recommendations is whether the same regulatory framework would apply to other players in the market that may be interested in the rights, for example, a telco, but that are not within the scope of a "content service enterprise".
An uncertain regulatory framework, which does not create a level playing field, is also likely to affect the value of digital rights. Certainly, implementation of the Convergence Review recommendations could affect the value of the rights Nine and Fox Sports hold (in terms of their ability to exploit the rights at their discretion), or at the very least, impact the value of any residual rights retained by the ALRC and yet to be sold.
We will be closely following the passage of the anti-siphoning reforms, the Government's response to the Convergence Review's final report, any appeal to the Optus TV Now decision and the Law Reform Commission's copyright inquiry. With sport being the major drawcard for free-to-air and pay TV broadcasters alike, and emerging content service providers, there is a clear need for regulatory certainty. Fortunately for the sports rights-holders, like the ALRC, the regulatory uncertainty does not seem to be affecting the value of sports rights or the ability to continue to sell terrestrial and digital broadcasting rights separately, at least not yet.
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