Locked in what Seven West Media had nicknamed “the war room” in the luxury The Star hotel and casino resort on the Gold Coast, billionaire proprietor Kerry Stokes, his son Ryan and Tim Worner worked late into the night last Thursday to save the free-to-air broadcaster’s summer schedule and in the process change the entire network.
Having recently lost Australian Open and other tennis rights from 2020 onwards, Seven executives, on the Gold Coast for the Commonwealth Games, were determined to make sure they secured the deal as the new home of cricket on free-to-air television.
Without that strategy, and the serendipitous timing of having all the network’s executives in the one place for the Games, Seven executives admit they would never have won the cricket rights as part of a near $1.2 billion deal Cricket Australia pulled off last week with Foxtel and its News Corporation bosses, that left rival networks feeling upset, confused and betrayed.
The deal leaves Seven with both the AFL and cricket for the first time, Foxtel being able to boast having a big summer sport ahead of its planned IPO, Nine Entertainment having lost cricket after 40 years but gained tennis and Network Ten with virtually no sport. It also means cricket has more money than ever before and some rare good news after the recent ball-tampering controversy.
It was a stunning week.
While Sydney was the epicentre of the cricket deal, up on the Gold Coast Seven’s war room ranged to as many as 12 people, including programming, legal, finance, sales and production executives, to as few as three. Commercial director Bruce McWilliam also worked over the deal both on the Gold Coast and back in Sydney.
However, in the last hours before final free-to-air bids were due at 11.45pm last Thursday, it was just the Stokes’ and Worner, having very tense conversations with Cricket Australia boss James Sutherland. Talks also took place with News Corp and Foxtel executives, including Siobhan McKenna, Patrick Delany, Michael Miller and Peter Campbell, who had sealed the pay TV component deal, as revealed by The Australian Financial Review on Thursday night, which would see the sport announce a record $1.18 billion six-year deal.
“I don’t think we could have got there if we hadn’t been there in the same place. The Comm Games was fortuitous timing for us,” Worner told the Financial Review.
“But we were trying to make sure the euphoria of the ratings high we were getting at the Comm Games didn’t affect us in the cricket talks. We needed to be cool about as much as we could.”
Ten, which had held the Big Bash League under the previous TV deal and grown the sport from a $20 million property no free-to-air broadcaster wanted into the crown jewel of Cricket Australia’s rights, submitted its final bid late on Thursday to be Foxtel’s partner after a frustrating day with the sporting body for the CBS-owned network.
Earlier in the week, Ten had submitted a new bid which would see the CBS-owned network take all of Cricket Australia’s broadcast rights for about $960 million over six years. Cricket Australia refused the offer.
Cricket Australia had been negotiating with Foxtel on Wednesday and locked in the major parts of the deal in late-night negotiations believed to have been at New Corp’s Holt St headquarters in Sydney.
The sporting body also kept negotiating with Seven on Wednesday night and Thursday morning and when Ten reached out again were told by Cricket Australia to engage with Foxtel.
Sources said it became clear to Ten that all that was left for free-to-air was to simulcast Test matches and 43 BBL games and Foxtel had sealed its deal for every ball of cricket played in Australia. Ten was told by Cricket Australia a number it needed to get to and, with CBS’ blessing, put an offer in for $80 million a year – $70 million cash, $10 million contra, or $480 million over six years – to partner with Foxtel.
At close to 5.15pm on Thursday, April 12, Ten and Cricket Australia shook hands on a deal to make Ten the free-to-air partner for cricket and Ten chief executive Paul Anderson signed a binding bid with a heads of agreement to be signed once drafted.
Cricket Australia denies a handshake deal and the binding bid was just that – a bid – and hadn’t committed to Ten.
However, Ten’s team, which included Anderson, David Barham and Stuart Thomas, left Credit Suisse offices in Sydney, where Cricket Australia had based itself, with the expectation its bid wasn’t going to be shopped to rivals, BBL return to their network and Test matches come to Ten for the first time under a simulcast arrangement with Foxtel, and they would be returning to negotiate a heads of agreement later that night.
“We have no problems with how the process unfolded and how we went about it. It was a fair process and we have no regrets about it,” Sutherland told the Financial Review. Cricket Australia is adamant it played the process fairly.
Around 8pm Sutherland called Anderson and Worner, telling them they needed to submit best and final bids. CBS executives were asleep in the US, and the bid deadline was pushed back until 11.45pm.
In the end, Ten put in their $80 million-a-season bid and pushed that they hoped their relationship with Cricket Australia would continue, given what it had done for the BBL franchise over the last five years. Seven bid $82 million a season – $75 million in cash and $7 million contra.
Crucially, Seven’s bid was slightly higher in cash terms. It was a small but important point for a sporting body that has recently lost sponsors such as Magellan Financial Group in the wake of the ball-tampering scandal.
Sutherland contacted Worner and Anderson separately at 2am on Friday the 13th, informing them of the outcome, which was revealed by the Financial Review hours later. Seven won, Ten lost.
The process had ended with a result which nobody could have predicted and under which both incumbent broadcasters would no longer partner Cricket Australia, and in particular one that led to cricket’s 40-year relationship with Nine ending.
In late February, Nine chief executive Hugh Marks reached out to Anderson about a potential tie-up on cricket. Marks had been working with Fox Sports, but hadn’t come to an agreement.
Nine had its eye on Tennis Australia’s upcoming rights and a partnership with Ten, which would see Test matches stay on Wide World of Sports and CBS’ newly purchased Australian network retain BBL and take on international limited overs cricket for the first time, and believed it made financial sense.
Nine and Ten were also open to working with Fox Sports. Nine had previously negotiated with Fox Sports about a potential joint-bid, as bringing in pay TV in some capacity would help get to the lofty outcome Cricket Australia wanted.
When Cricket Australia put out their tender in mid-March, the sporting body gave less than two weeks for interested parties to work out their bids. Nine, Ten and Fox Sports couldn’t come to an agreement in the timeframe, Nine and Ten only reached their agreement on March 16, and the pay TV provider submitted its own bid for the whole package, while the pair of free-to-air networks submitted a joint $130 million per season bid. Seven also submitted a bid, noting it would need a partner.
Nine and Ten’s joint-bid did not break down what they would pay for each for Cricket Australia’s 11 different broadcast packages. Marks and Anderson flew down to Melbourne the afternoon bids were due, on March 19, for a meeting with Cricket Australia at 5pm. Sutherland was in Dubai, but Marks and Anderson met Cricket Australia’s media rights team Ben Amarfio and Stephanie Beltrame as well an in-house lawyer and an external lawyer.
The pair of television executives were keen to explain why they had bid together. The meeting was over in 15 minutes. By the end of the week Cricket Australia had rejected the joint-bid as non-compliant in a short two-line email to the general counsels of Nine and Ten. Cricket Australia chairman David Peever had even slammed Ten’s local management as “bottom feeders”.
On March 28, Cricket Australia told Nine and Ten they would not engage until the JV was dissolved. On March 29, Nine announced its swoop on Tennis Australia’s broadcast rights.
Once Nine secured tennis, it handed negotiating of cricket to Anderson. Marks was still keen to hold on to Test matches, but was adamant and upfront with Ten that Nine would not be overspending on cricket. On Thursday, April 5, Ten resubmitted an all free-to-air bid worth $900 million over six years, where it would sub-licence Test matches to Nine, for the same price as the network had paid under the previous deal. Cricket Australia did not engage until the following Monday, when Sutherland, Amarfio and Beltrame flew to Sydney.
On the morning of Friday, April 6, Cricket Australia and Foxtel had nearly nailed down their deal. Campbell was negotiating via phone conference, and 12 of 14 legal points in the contract drawn up had been worked through.
Campbell ended the call out of frustration. The Fox Sports chief operating officer was annoyed, having been led to believe they were close to a deal. Cricket Australia came back to them with more issues and it was clear they were still talking with Ten.
Miller texted Peever that afternoon that Fox Sports was still keen on cricket.
News Corp’s The Australian decried Cricket Australia, claiming the body’s “rights hope hit for six as Foxtel, Fox Sports bail”. Less than a week later, Foxtel had sealed a deal with Cricket Australia and is now partnered with Seven.
While the outcome was known the morning of Friday, April 13, the details were not finalised between all the parties.
Cricket Australia set a 2pm press conference on Friday, but Miller and Delany were still up in Credit Suisse’s office negotiating on the phone with Worner and Stokes, who were already at the Intercontinental Hotel, through the final points of the contract.
Miller came down to the conference in Sydney around 2.30pm, while Delany walked the two blocks near Circular Quay around 3pm. The duo enjoyed a beer soon after the announcement was made official.
Worner, meanwhile, flew back to the Gold Coast and joined the Stokes father and son duo at Seven’s corporate entertainment precinct at the Commonwealth Games. After a quick trip to Rebel Sports, Seven staff had decked out the area with cricket bats, balls and stumps adorned with Seven stickers.
It was a celebration of a pivotal moment in Australian broadcasting and sport, one which sees the biggest amount of sports content ever move networks.