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Analysts advise Channel Nine to move away from loss-making cricket broadcast coverage

Analysts advise Channel Nine to move away from loss-making cricket broadcast coverage
April 27, 2017

Cricket Australia could face a major dip in its income after global investment bank UBS urged broadcaster the Nine Network to end its long-time Test and one-day cricket coverage.

The broadcaster has a five-year deal worth $500 million with Cricket Australia, which expires next year. Estimating that the broadcaster is losing up to $40 million every year televising the sport, UBS is suggesting that Nine should consider walking away from negotiations if it cannot secure a better deal for the period 2018 to 2023.

Nine has broadcast cricket every summer since Kerry Packer famously secured the sport for Nine in the late 1970s, ushering decades of successful one-day cricket coverage.

However, in a note to clients UBS analysts advised that "the existing cricket deal costs Nine circa $100 million per annum (but) we estimate the existing deal likely only generates gross revenues of $60-$70 million."

"We think it would seem logical for Nine to enter negotiations with the following mindset: i) more cricket content at no additional cost, or ii) to step away from the cricket contract."

"More cricket content" might suggest that Nine secure rights to the increasingly popular Big Bash League from Network Ten.

Ten originally secured rights to the Big Bash League for just $20 million – a remarkably low price given how popular Twenty 20 Cricket has become in the past two summers.

With Nine potentially prepared to walk away from cricket coverage or pay less for it, Cricket Australia could be impacted by a loss in revenue at a time when it is renegotiating major sponsorship contracts

It is also negotiating a new pay deal with players, with its existing pay deal expiring on 30th June.

Nonetheless, Cricket Australia is confident it will find a buyer, with Ben Amarfio, its Executive General Manager for Broadcasting, Digital Media and Commercial, telling Fairfax Media "we are not concerned that there will be a lack of interest for our media rights," the body's broadcasting manager Ben Amarfio told Fairfax Media.

"Live sport, and cricket in particular, continues to be a premium asset."

Image: One-day cricket action at the Adelaide Oval.

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