AFL secures revised broadcast deal
The AFL has secured a revised broadcast rights deal with partners Seven West Media and Foxtel in the moments before the return of this year's season.
Free-to-air broadcaster Seven and pay TV operator Foxtel were finalising the deal in the hours leading up to Thursday evening's Collingwood v Richmond kick-off and have agreed to a reduction on this year's payments based on a reduced 153-game season and finals.
AFL boss Gillon McLachlan has secured a new deal with broadcasters Seven West Media and Foxtel.Credit:AAP
The parties have been renegotiating the terms of the existing $2.5 billion six-year contract, which was secured by Foxtel, Seven and mobile rights partner Telstra and expires in 2022, after the coronavirus pandemic shut down the season and caused losses in advertising and subscription revenue for the broadcasters.
The Age reported that the AFL was on the verge of securing a two-year extension of its television rights deal with Seven last week in exchange for a cost reduction on its existing deal, but that Foxtel was holding out on an extension for a larger discount.
Seven will receive a discount of about 19 per cent and an $87 million net benefit between 2020 and 2022. It has also secured a two-year extension on "improved terms".
Chief executive James Warburton thanked AFL boss Gillon McLachlan for their commitment to the broadcasters.
"The AFL and Seven are a core part of each other’s DNA, and we are delighted to have not only reached a revised agreement for the current contract term, but to have extended our relationship for a further two seasons taking the agreement through until the end of 2024," Mr Warburton said.
The broadcaster was expected to pay about $150 million to the AFL this year, with production costs of about $20 million, but they will be smaller this season due to the inability of talent to fly interstate and reduced staff on site during matches.
Industry sources indicated Foxtel, which is owned by Rupert Murdoch's News Corp and Telstra, will save as much as $30 million on this year's deal, which will alleviate some of the financial pain caused by the pandemic. However the broadcaster will not announce an extension.
The deal has enormous ramifications for the 18 clubs and players since it provides more than 60 per cent of the game's revenue in normal circumstances and far more during the crisis.
Seven's revised arrangement will provide further financial relief to the broadcaster, which has been cutting costs to offset severe advertising decline caused by the pandemic. The company, which is trying to reduce its $541.5 million net debt pile, recently sold its magazines arm for $40 million, its West Australian headquarters for $75 million and axed a large number of roles.
Foxtel has lost a large number of subscribers due to the suspension of sport and had been trying to renegotiate to receive compensation for the loss of sponsors and subscribers. The company has stood down more than 200 staff and axed more than 300 jobs in the last few months.
Media executives have previously public argued that they have overpaid for sport, which is consider a loss making piece of content due to the production costs they incur in addition to rights fees.
Foxtel, which contributed about $1.3 billion to the AFL deal in 2015, believes it overpaid, sources previously said.