When Nine Entertainment secured the broadcast rights for National Rugby League (NRL) matches in 2021, the company was valued at A$5 billion (US$3.6 billion).
Fast forward more than five years and the media group’s market capitalisation has plunged to $1.55 billion and it is being warned not to overpay in the next round of bidding for one of Australia’s marquee sports rights packages.
Australian Rugby League Commission Chairman Peter Vlandy’s is believed to be seeking a new deal not only higher than the $2 billion the NRL got in 2021 but more than the $4.5 billion the Australian Football League (AFL) secured in its six year deal in 2023.
Cutting and dicing
The head of rugby league’s governing body wants football bragging rights so much that he has asked for separate bids for the flagship three-game State of Origin series each year, along with Thursday, Friday, Saturday, Sunday and Monday games.
“It’s complete open slather. They’re searching the universe to try and replicate what the AFL did,” media rights adviser Colin Smith told Azzet.
An announcement is expected this year with a decision possibly within months, according to one source who said: “We are approaching the pointy end of the discussions now.”
This means potential bidders, which have expanded since the last deal to include the fast growing streaming providers, will have to stump up more than $4 billion over five years to please the powerful administrator known by many as PVL.
“So to try and get to that magical number that the AFL have got to, they're not going to be able to keep it all with one or two networks,” said one long-time NRL observer.
He expected more NRL games to be put behind a paywall and State of Origin to be potentially sold to another free-to-air (FTA) broadcaster like Seven Network if Nine was not prepared to offer enough.
Under Australia’s ‘anti-siphoning rules', ‘Origin’ is on the list of sports that must be offered to FTA broadcasters first.
Nine paid $575 million in cash and $15 in ‘contra’ for the five-year NRL rights, which expire in 2027, with Foxtel, since sold by News Corporation and Telstra to DAZN, paying the balance of a total price reported to be more than $2 billion.
Streamers move in
The problem for Nine is that core FTA TV revenue is falling in the face of competition from streaming services like Prime Video, DAZN, YouTube, Netflix, Walt Disney Company, Warner Bros. Discovery, Paramount Global and Apple TV+ .
In an interview in 2024, former Nine CEO Mike Sneesby said TV revenues were reaching an ‘inflection point’ where growth in broadcast video on demand revenues more than offset structural declines in FTA TV.
“It's funny, isn't it, that all of a sudden when it comes around to broadcast negotiations, all the TV channels are broke,” the observer joked, adding: “I don't think cash flow is too much of a struggle for them.”
He conceded it was a difficult time to negotiate broadcast rights due to the economic climate and the disruptive impact of artificial intelligence (AI) on all businesses.
While the last NRL deal was signed amidst the COVID-19 global pandemic and two years earlier than required, the AFL had timed its negotiations perfectly to achieve “the gold standard”.
“We went early which, in hindsight I just don't think that was the right call. I think it's really set us back,” he said.
“I think we're lagging further behind and we've missed the boat to get to that number that AFL has done.
“The AFL… couldn't have timed their broadcast negotiations better. I know privately they are over the moon. In the future, if they even match what they got for this current cycle or a small drop off, they'd be stoked.
“We're just going to have to probably do some things that are probably going to reduce the value offering to our fans. I think it's just going to get more expensive to watch the NRL.”
Farewell glory days
Morningstar’s Director of Equity Research Brian Han said the NRL’s asking price would be “astronomical” and much higher than the last deal, given additional teams were being added to the competition from Papua New Guinea (PNG) and Perth.
“There is no arguing that the NRL is a marquee, winter live sports franchise for Nine,” he wrote in a research note.
But he said Nine’s agitated shareholder base could not tolerate an exorbitant jump in rights costs given its depressed market value, and the fact that its FTA competitors were even less able to afford the rights and anti-siphoning rules could be leveraged against the NRL.
The days of justifying big increases in rights cost on tenuous concepts such as "promotional platform", "lead-in, lead-out" scheduling benefits and "halo" impact on the network were over.
Han was sceptical there would be separate bids for parts of the NRL, saying: “That’s like saying I’m going to sell you my car but … I want you to put a value on my power steering, my tinted window, and my four tyres with alloy wheels.”
“Obviously, he’s doing the right thing, trying to push the bids up, and he’s invited all and sundry to have a look for it and bid for it.”
He believes Network Ten, owned by Paramount Global, would be interested in bidding but was struggling while Seven Network, now owned by Southern Cross Media, did not have the financial resources either.
“So in the free-to-air land, you really only have Channel Nine,” Han said.
Although Foxtel, under DAZN ownership, might be able to afford the rights, they cannot be sold only to a pay TV or subscription streaming player under anti-siphoning laws, while streamers like Netflix and Amazon might be interested in Origin, finals, Thursday or Friday night games but not all of the rights.
Han said it was extremely important for Nine to retain the rights because it had market leadership in viewership and revenue share.
“You take away marquee winter sport that dominates the schedule from March until September, you are at risk of losing that market leadership in terms of revenue share and viewership.” Han said.
Value of new teams
Monash University lecturer in sport and Australian studies, Dr Tom Heenan, said Vlandys could demand more money from broadcasters on the basis of the expansion of the competition into PNG.
In December 2024, the Australian government committed A$600 million over 10 years to create a PNG-based team in the NRL in an announcement believed to be aimed at thwarting China’s increasing influence in the region.
“This is now a real bargaining chip when it comes to the media rights. They can say we now have a bigger market,” he said.
Heenan said that although the next rights deal would exceed the value of the last, the game lacked the number of stoppages of the AFL that allowed for advertising on television.
“They will not get as much as the AFL because of the structure of the game. It’s designed to put ads in,” he said.
A solution was to follow the lead of the Fédération Internationale de Football Association (FIFA), which is adding a mandatory three-minute stoppage in each half of matches in the 2026 World Cup.
But he expected Nine to retain the NRL rights and did not expect the streaming companies to be bidding.
But Colin Smith, the Foundation Director of media rights advisory business Global Media and Sports and a director Media Rights Value, said the two additional teams would not increase the value of the rights.
“They will get a significant increase. The question is, will they get to the $4 billion of the AFL? That’s probably less likely,” he said.
In 2023, the AFL had the advantage of Network Ten offering a large premium, rumoured to be $300 million and $600 million more than the NRL accepted from Nine and Foxtel.
“Nine can’t afford to lose NRL and just rely purely on a week or two weeks of tennis. Whether they will bid both for Stan Sport and Channel Nine, that’s a big balance sheet issue,” Smith said.
“Revenues of free-to-air television are falling every year, 8 to 10% per year. It’s not like in the halcyon days when revenues were going northwards. The balance sheets are not necessarily strong enough to go mad with this.
“DAZN also cannot afford to lose it. If it was taken over by Stan Sport or by Paramount, that would be a disaster for DAZN.”
