Southern Cross Media boss Grant Blackley says a recently signed commercial deal to broadcast Network Ten’s shows will allow the regional broadcaster to review its options in two years when key sports rights come up for negotiation.
Mr Blackley said the agreement to broadcast programs such as Masterchef Australia and Australian Survivor would have a “neutral” effect on the media company’s earnings, adding a separate deal to air Sky News in regional areas had already piqued advertisers’ interests.
“It’s an ever-changing market at this point in time and we have multiple rights that are available…particularly in the sporting area, that will be coming into the market in roughly two years time,” Mr Blackley said. “The market is changing to such a point that we felt doing a deal for longer than two years…wouldn’t be in our commercial interests.”
Southern Cross’ deal with Network Ten, which commences on July 1, comes three months after Nine Entertainment Co announced it had signed a seven-year deal with Ten’s current affiliate partner, WIN Corp (Nine is the owner of this masthead). Ten announced earlier this week it had signed a separate deal with Bruce Gordon’s WIN Corp for Northern NSW while Southern Cross recently revealed it would also launch a new channel – Sky News Regional – in Southern NSW, Queensland and Victoria.
“There’s been a substantial amount of interest to date [in Sky News regional],” Mr Blackley said. “We’re pretty early in the cycle at this point of second half budgets so it’s really just coming into focus as we speak, but there’s certainly been a lot of inquiry.”
A two-year contract between affiliate broadcasters is unusual, but it allows the arrangement to expire at the same time as Seven’s current arrangement with Prime Media Group. The expiry will also coincide with the conclusion of the NRL’s free-to-air television broadcast deal with Nine. Tennis Australia and Nine’s five-year deal expires in 2024. These factors will provide competition in negotiations between Seven, Ten, Southern Cross and Prime.
Southern Cross said it expects its television earnings under the affiliation deal to be neutral compared to the current Nine arrangement. The Sydney Morning Herald and The Age reported in May that Southern Cross Media could lose almost $30 million in advertising dollars annually from the switch in affiliate deals based on data from the Standard Media Index (SMI).
“We’ve confidently confirmed to the market that we see this moving forward as being earnings neutral…Ten will achieve a lower revenue number at the top line, but appropriately we will also be paying a lower fee than we did to channel Nine,” Mr Blackley said.