Will Nine Network Be In A Position To Bid For NRL Rights As Sports Deals Fail To Deliver
Under Kerry Packer the Nine Network was a TV powerhouse where investments in sport and news delivered results, this week Nine shares, are down over 40% for the year, after closing the day at $1.21.
CEO Mike Sneesby (seen below) has been flicked, as the stark reality of their Olympic losses sink in for the board, who could well be in strife right up to the Brisbane Olympics in 2032, following the expensive acquisition of rights with some questioning whether they will be in a position to actually bid for the NRL rights next time round.
Sneesby’s resignation is understood to be prompted by the commercial, reality that the Network has overspent on sports rights for the Olympics which does not put them in a good position when it comes to the next round of NRL rights
According to the Daily Mail, Nine sources claim that Sneesby had been under increasing pressure over the company’s ailing profits, with the catastrophic cost of the Olympic Games proving the ultimate tipping point.
When ChannelNews suggested earlier this year that the Olympics could turn into an Olympic embarrassment for the network due to secondary sponsors failing to buy packages to the Paris Olympics the Network claimed this was not true.
Sneesby offered a public ‘guarantee’ in July that the network would bank a net profit off the back of the sports extravaganza.
Now it’s been claimed that the cash-strapped broadcaster will end up losing close to $75million on the Paris Olympics.
‘Sneesby claimed prior to the games that the Network had achieved $140million worth of revenue but when this is broken down huge holes appear in the accounts.
The Daily Mail said ‘Well, okay, but they have to pay 10 per cent of that to [media buying] agencies – which pegs that back to $126million.
‘Then, when you consider that they would have written about $100million against the same 17 days last year, you’re left with a lift of just $26million.
‘At the same time, they’ve paid out about $60million for the broadcast rights and spent another $40million on production costs – so what you’re left with is a massive budget blackhole.
According to competitors the network could be in “Serious strife” when they have to fund the Brisbane Games with the closes spread over the full period of their contract with the International Olympic Committee facing their own problems as long time sponsors such as Panasonic, and McDonalds fail to renew their sponsorship packages after decades sponsoring the games.
One competitor said, ‘Right now, it’s still all smoke and mirrors – we’re not even going to know the full extent of the nightmare until the FY25 results are released next year.’
Nine sources said the company was now re-examining all of its sports rights agreements as it desperately tries to strip costs, and this could be a problem for the NRL if Nine choose not to bid.
The network is also facing increased costs after bidding for the Australian Open Tennis rights.
‘The Tennis rights cost $60million per year when nine first got them and now we’re paying $100million and it’s a loss-maker.
The industry acknowledges that Fox Sports have the best NRL coverage, and more games with consumers willing to pay for a subscription to Kayo or Foxtel to get access to the better coverage.
