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AFL boss: NBN could let us bypass broadcasters

‘Give me more money, you bastard. Boom-shanka’*

Internet Security Threat Report 2014

It’s probably an ambit claim, a negotiating position, but remarks about selling direct to viewers from Australian Football League boss Andrew Demetriou are, to the country’s broadcasters, a shiver looking for a spine to run up.

In an interview with indy commentary site TheConversation, the Aussie Rules head-kicker says the country’s proposed National Broadband Network could give the football code the chance to bypass networks completely. Instead, the AFL could use the NBN to, as Demetriou puts it, “sell direct to the consumer”.

In Australia as elsewhere, sports rights are big business: the fuel in the News Corporation rocket, the sparkle on the Manchester United brand, the jewel in Twenty20 cricket’s crown, and the means by which sports betting agencies suck in the punters.

In spite of Australia’s relatively small market – twenty or so million people, about eight million households, and on a good day a million or two actual viewers – sports rights command big dollars. Current negotiations are worth over a billion dollars per code to the two big games (the AFL, and the NRL-controlled rugby league: sorry, soccer doesn’t rate in Australia).

But the AFL isn’t nailed down beyond the next contract – and if he’s playing the long game, Demetriou has good reason to start turning the screws now.

As he explained to TheConversation, it’s about margin management: there’s all these lovely dollars floating around, and some of it is sticking to other peoples’ fingers. The AFL has already set up its own media company to try and improve its margins.

Sure, TV broadcasters conduct a quite satisfying bidding war; the free-to-air incumbents pay to try and limit the growth of pay-TV by buying more games, while pay-TV wants more games to expand its audience.

All of which inflates the price tag quite wonderfully, but if the game is worth a lazy two hundred million or so each year, with 24 ordinary rounds at eight games per round, plus a premium (but perhaps smaller audience) for the finals series …

Each fixture might only be worth a million or so (give or take a discount or premium depending on the fan base of individual teams). But TV only has so many “live” spots, fewer than the number of games, while the Internet is always there, the NBN has just announced how its multicast streaming service will work, and all games could be seen live by any fan that wanted.

For the idea to stack up, the AFL would need a little over a million dollars, per fixture, per week (leaving aside the imponderable premium that might attach to the finals series). If – a big if – the AFL can average 200,000 viewers per fixture, the per-view price of a fixture need only be five dollars.

(Sure, there will be a deal to be cut with ISPs, but that’s what people like Demetriou are for).

All this anathema to TV broadcasters: free-to-air, because viewers wouldn’t be bound by programming conflicts; pay-TV, because viewers wouldn’t have to buy a package padded out with 1960s reruns, news services and old movies just to watch the footy.

All of this is almost certainly moonshine: I’m quite confident that Demetriou is putting an ambit position out there in public well ahead of the next round of rights negotiations.

It does, however, illustrate something that’s forgotten in the political argy-bargy surrounding the NBN. One popular criticism of the network investment is that all that fibre and all that bandwidth is unnecessary for Internet applications; ergo, it’s a huge investment in entertainment infrastrcture.

However, as Demetriou highlights, entertainment isn’t just the private matter of choosing between YouTube, online porn, or couch-surfing to choose between American and British sitcoms. Entertainment is a big chunk of the real economy.

It may be quite legitimate to say that government should not be subsidizing entertainment; such a practice is sanctioned by time (the Romans did so, after all), but not necessarily by logic.

However, dismissing entertainment as silly or frivolous, and therefore not a legitimate use of a high-speed network, is out of step with reality. Just ask Andrew Demetriou. ®

*I know that I have abbreviated the full quotation from The Young Ones. The correct sign off is “May the seeds of your loin be fruitful in the belly of your woman.” ®

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