'It's game on': The battle being waged off the cricket pitch

Cricket Australia CEO, James Sutherland addressing media, in relation to the MOU with the Australian Cricketers?????? Association, Jolimont, Melbourne.  July 27th 2017. Photo: Daniel Pockett
Cricket Australia CEO, James Sutherland addressing media, in relation to the MOU with the Australian Cricketers?????? Association, Jolimont, Melbourne. July 27th 2017. Photo: Daniel Pockett
The Age, Green Guide. Pic shows Ten's Footy directors Chris Law and David Barham (jacket) with the trucks at the MCG. Pic Simon Schluter, 24 September 2007. sms070924.002.001.jpg

The Age, Green Guide. Pic shows Ten's Footy directors Chris Law and David Barham (jacket) with the trucks at the MCG. Pic Simon Schluter, 24 September 2007. sms070924.002.001.jpg

All eyes are on the second Ashes Test in Adelaide, where the on-field hostilities are expected to become increasingly fractious.

But behind the scenes another battle is about to begin that promises just as much drama - the $1 billion fight for the right to broadcast cricket in Australia from 2018 to 2022.

The combatants are some of Australia's biggest media companies as well as social media giants such as Google and Facebook, which want to upset the once-straightforward relationship between the major sporting bodies and commercial free-to-air television.

The last deal was struck in 2013 when Nine Entertainment Co and Ten Network Holdings took out the major rights. But the upcoming negotiations promise to be a far more complicated snapshot of the Australian media landscape.

This time, a multitude of companies ranging from telecommunications giant Telstra to Qatari pay TV group BeIN Sports to technology giant Amazon are expected to have a look at the country's most popular summer sport.

Most of the big players are not saying much publicly. However, there is already plenty going on behind the scenes, according to seasoned observers.

"It's game on for cricket," says a director of one of the major commercial networks. "There is plenty of posturing already."

Industry sources say media companies are particularly interested in the advertiser-friendly Big Bash League, currently in the hands of Ten, with the rights likely to go for triple what was paid five years ago.

Certainly, Cricket Australia boss James Sutherland can expect a bumper deal.

Mainstream sport is becoming an increasingly valuable commodity in a world where movies and other forms of entertainment are being commoditised by the likes of Apple, Netflix and Amazon.

The prices paid for the rights to Premier League football in the UK and NFL in the US have been on a record-breaking run, while AFL and rugby league have also enjoyed huge increases locally.

Sutherland secured a deal worth $120 million a year in 2013. His goal of securing an increase of at least 50 per cent is ambitious but certainly not impossible.

On the front foot

When Ten snapped up the BBL rights - where eight cities compete in the domestic Twenty20 - it cost the embattled Sydney-based network $20 million a year. This is now widely considered a bargain.

Five years ago, the Twenty20 format was attracting an audience below 200,000. By 2017, it had been nurtured into a ratings winner with more than 1 million viewers. Popular among young Australians and families - both profitable demographics - it could prove to be just as attractive as the traditional five-day Test matches.

Ten's head of Big Bash League and Women's Big Bash League, David Barham, is particularly proud of the growth of BBL, which is now one of the top 10 attended sports competitions globally.

He is confident Ten will secure the rights again, despite "digital disruption everywhere, with more and more people broadcasting as we go along".

"We think it's in our favour. Our demographic suits the BBL," Barham said.

Ten was aligned with the Rupert Murdoch-controlled News Corp until the network collapsed in June. Its new owner, US broadcasting giant CBS, has deep pockets, which could allow the network to be more aggressive this time round.

There is even speculation Ten could bid for some international BBL rights, although much of this is guesswork. Some observers predict cricket may not even be on the top of the new owner's list of priorities.

For his part, Barham remains tight-lipped.

"There will be lots of people lining up for the Big Bash, but there's nothing formal going on yet," he says.

The incumbent Nine also faces a tough fight if it wants to keep its hands on the rights to home cricket internationals.

Nine has been broadcasting Australian Test matches and one-day internationals since 1979 and it is hard to imagine the network without the sport and its famous commentary team. However, increased competition for sports rights make them more difficult to retain at every new set of negotiations.

In 2013, Ten made a $550 million offer to secure the entire cricket package, but Nine held the rights under its existing contract to match the offer by bidding about $450 million to retain international rights.

Nine would not comment about its plans, but in April, investment bank UBS encouraged it to axe the cricket or achieve more cricket content as it was losing up to $40 million a year televising the sport.

This number may be correct, but doesn't take into account what executives describe as the "halo effect" of owning a big sport. This includes commercial spin-offs and partnerships and better relationships with key advertisers.

Aiming for a home run

At Cricket Australia's annual general meeting in October, Sutherland directly referenced a potential jump in the value of the rights, pointing to the Indian Premier League's $3.2 billion, five-year deal.

"We believe there is significant interest in cricket's rights. Ultimately, the market will decide the value of our rights but we do know the media landscape is changing all the time," he said.

He added there would be an "unprecedented number of media companies of different sorts" expressing interest.

"Things are changing quickly and by the day, and you only need to see the recent sale of the IPL rights in India and the different companies that bid for those rights to illustrate just how different the media landscape today is compared to the last time we sold our rights."

While Sutherland said the next cricket broadcast deal formalities would start in the "near future" and Barham says they will need to be finished "mid-2018 [at the] latest", media executives are hopeful the deal can be concluded much earlier.

The corridor of uncertainty

Times have changed dramatically in half a decade, and the rights negotiations are expected to lure in a whole host of new players - particularly those looking for digital rights.

Among the companies vying for a shot are the telcos.

The first hint of this was in 2015, when Optus signed its first sports rights deal with Cricket Australia to become its mobile streaming partner, and put to air classic matches on Optus Sport in a multimillion-dollar move.

Not only do exclusive sports rights give telcos an edge among customers keen for coverage and tickets, they also allow for cross-promotional branding.

Rival Telstra has focused heavily on NRL and AFL.

Optus's director of media and sponsorship, Shaun Kesby, says his company will continue to explore options to expand on entertainment and content offerings with "sport a key part of our strategy".

"The shift to online streaming continues to grow in popularity and this is a large contributor to the changing sports rights landscape," he says.

But telcos aren't the only players in town. Global trends suggest social media giants are looking to get their hands on live sports, which are increasingly going digital.

In November, Facebook reportedly interviewed for a "head of sports programming" after actively seeking out international sports rights, including a $US600 million ($754 million) bid for Indian cricket streaming rights.

It lost out to broadcaster Star India, which made a $US2.55 billion bid to IPL for the combined TV and streaming rights.

But it's not ruling anything out.

"We have strong partnerships in place in this market and we will be looking to continue and build on these in 2018," Facebook Australia and New Zealand managing director Will Easton says.

Social media business Twitter has also been ramping up its sports coverage.

After broadcasting an NFL match a week, it moved into a revenue-sharing deal in 2016 with the Victoria Racing Club, live streaming the Emirates Melbourne Cup. In 2017, the live stream was expanded to include the marquee races, with content sponsors such as Lexus and Tabcorp.

Twitter would not comment specifically on how it would act when it came to cricket rights, but a source close to the company says it is more interested in partnerships than competing for the rights themselves.

Among all these different companies, one name came up more than any other - shopping giant Amazon.

Outbidding Sky for elite men's tennis in mid-2017, the online retailer has rights for live and on-demand tennis shows to British and Irish video subscribers and has also snapped up US Open coverage.

Soon to formally launch in Australia, it would be "quite the entrance" if it also goes after cricket rights, an industry insider says.

Amazon was not prepared to comment on the speculation.

Playing with a straight bat

With so many options, there are seemingly endless ways that live cricket could be chopped up, repackaged and sold off to the highest bidders. This could be lucrative - allowing multiple companies to stump up top dollar for niche products.

But media buyers warn too much fragmentation could be offputting to sponsors and advertisers - who make the buying of rights commercially viable.

It's all about the audience - pulling in the most numbers and engagement, Dentsu Aegis Australia and New Zealand chief executive Simon Ryan says.

And with this in mind, traditional broadcasters may be best placed to secure both TV and streaming rights.

"When people bid for the cricket rights, they have an idea of who they can attract, as an audience and as advertisers. In my view, sports has the audience and it's up to the rights holder to entice advertisers," he says.

"Big Bash is attracting quite a big audience. It creates the opportunity to get the large audience in a short period of time. It's a different approach to a Test, and a different type of advertiser.

"The best outcome is for there to be one or two bidders, who can offer multi-devices and a telecast. When things are too fragmented, sponsors and advertisers end up with less content."

Ratings are still strong overall on Cricket Australia's figures.

In 2015-16, 1.3 million people watched Test, ODI and T20 international matches on Nine Network. And more than 1 million tuned in to watch the KFC Big Bash League tournament on Network Ten.

Nothing else in summer comes close - it's the No.1 participation sport in the country - and last year was the BBL and Rebel Women's BBL's most-attended cricket season ever.

Anti-siphoning laws still protect some of free-to-air's dominance, preventing pay TV channels from bidding on sporting events of national significance unless national or commercial broadcasters have not obtained the rights.

It doesn't entirely rule out the involvement of channels like Fox Sports, which currently shows international matches played overseas. Its chief executive, Patrick Delany, says it is "always interested in sports popular with Australian sports fans".

News Corp and Telstra in August revealed plans to merge Foxtel with Fox Sports and flagged a sharemarket listing down the track.

???But with the pay TV audience in Australia being more limited than similar offerings in the UK and US, Victoria University screen media lecturer Marc C-Scott says it is less likely a significant cut will be given to paid providers.

"Free to air will play a part, but I don't think it will solely ... it'll be broken up but there is a risk of it being spread too thin," he says.

But he has little doubt there will be fragmentation.

"Cricket has so many micro-leagues, the question is how much can you break it down?" he says.

"In five years, things can change a lot. Live streaming is now increasingly popular and it wasn't [in 2013].

"This same effect can be considered on the tail-end of the deal - how might the media landscape look in another five year's time?"

This story 'It's game on': The battle being waged off the cricket pitch first appeared on The Age.