News Corp chief: Pandemic an ‘existential moment’ for sport

The global chief executive of Rupert Murdoch’s News Corp has told investors that declines in sports rights costs in Australia will continue in a boost for the company’s embattled pay TV operator Foxtel.

“There needed to be a reset in sports rights cost. In Australia there has been a reset and that reset is still in motion and there is no doubt as to the benefit of Foxtel,” Robert Thomson, News Corp’s New York based CEO said at an investment conference hosted by investment bank Goldman Sachs.

News Corp global chief Robert Thomson is optimistic about the future of Foxtel.
News Corp global chief Robert Thomson is optimistic about the future of Foxtel.

The comments come amid mounting pressure on sporting organisations from media companies over the costs of sports rights, which have increased at above inflation rates for decades. Foxtel and other media companies have secured significant discounts from sporting organisations during the coronavirus pandemic.

“There’s a realism in Australia about sports rights,” Mr Thomson said. “The sports themselves have generally become conscious of the value of media partnerships and are aware of the danger of not having those partnerships. It’s an existential moment for some of the sports given their own cost base.”

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Foxtel is one of the biggest sports broadcasters in Australia. It has already saved $180 million this year by renegotiating existing broadcasting deals with the AFL, NRL and the A-League, after arguing that social distancing restrictions caused by the pandemic had reduced the value of the contracts.

The pay TV provider is also seeking a reduction on its cricket contract, while sport’s free-to-air broadcaster Seven is trying to terminate the deal altogether. Nine Entertainment Co, which publishes this masthead, also secured a significant discount on its rights deal with the NRL.

News Corp last year gave a $300 million lifeline to Foxtel, which has been facing its own challenges as subscribers shift to cheaper streaming services. But the Murdoch-controlled media company has said it will not tip more money into the business .

At fourth quarter results, News Corp’s subscription video segment, which is largely made up of Foxtel, reported a revenue fall of 14 per cent for the full year to $US1.8 billion. Foxtel’s total customer base is currently under 2 million customers, while sports service Kayo has 542,000. Chief executive Patrick Delaney said earlier this month that the subscription television operator would only focus on acquiring TV rights to ‘tier-one’ sports moving forward.

Mr Thomson said Foxtel, which is 65 per cent owned by News Corp and 35 per cent owned by Telstra, would base its future decisions on whether to invest in sports rights on the quality of games, rather than just the quantity.

“These things are not just about the quantity of matches, they are about the quality of the experience for our customers,” he said. “We all know which teams are the big drawers and the importance of exclusivity. And that for us is a big factor. Not just how much we spend, but the quality of the relationship we have with the sport and how the sport understands our needs.”

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Source: Thanks smh.com