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Alan Kohler
Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).
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An Australian Open wildcard for Ten

The Australian Open is not just an advertising coup for Seven, it's a marketing springboard for the year ahead. But Ten could desperately use its own tennis win.

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The importance of getting off to a good start cannot be underestimated. It is one of those timeless clichs that actually holds true, whether in sport or in business. Seven understands this. In the Australian Open it has one of the most important strategic advantages in Australian television.

The benefits the tennis brings Seven are significant. Firstly, as an advertising product the tennis is a compelling one for brands looking to not only align themselves with elite performance but also reach a large volume of viewers across a national footprint. Unlike many sporting codes – such as AFL, NRL and Rugby Union – tennis is a strong rater in all five capital cities. It also brings a relatively balanced audience gender wise – which sport traditionally struggles to do – making it even more appealing to advertisers. Big budget campaigns for 2013 from the likes of Kia, ANZ, Optus, Samsung, Jacob's Creek, Tourism NT and McDonalds would have been sold at a healthy premium, with non presenting sponsor spot buys also in high demand.

And so they should. The tennis in 2012 was a ratings triumph for Seven, with the second week seeing Seven achieve a metro share of 39.1 per cent, trouncing Nine’s 23.4 per cent, TEN’s 18.9 per cent, ABC’s 13.2 per cent and SBS’ 5.5 per cent.

This alone makes Seven’s reported $14-20 million annual contribution for the Australian Open rights a smart buy. It brings the channel 14 days and 13 nights of tennis at a cost of around $1 million per day (plus production). The timing of the tournament for a commercial TV station couldn’t be better. The Australian Open occurs in the two weeks prior to the ‘ratings season’ commencing. It also occurs smack bang in the middle of when most people return to work and towards the tail end of school holidays ensuring full lounge rooms. It provides a significant amount of content for Sunrise and Today Tonight. Plus, the broadcasts generally have a clear run, with other networks saving their best programming for the ratings period and running filler or repeats across the evenings. Aside the Olympics and the AFL and NRL grand finals, there is no other event which sees the other networks roll over so timidly.

The current Australian Open agreement, which commenced in 2009, ends in 2014. It is highly unlikely Nine can bid considering its relationship with Cricket Australia and the fact the cricket and tennis compete so directly; but there is likely to be significant appetite from Ten to nab the rights, and you can be sure incumbent Seven will defend them vigorously. It has too much at stake. This alone will assure Tennis Australia that they would, if they were to take the 2015-onwards rights to a competitive tender, see a healthy premium on the current deal – a premium that in my view could see a price increase in the realm of 25-30 per cent.

So why is it being reported that members of the Tennis Australia board are seriously considering gifting Seven the rights to 2015-2020 without any sort of open competitive process? Even if the Seven offer is the best one, what harm is there in seeing what else is out there? After all, the rights have been with Seven for the past 40 years.

The potential for such a big rights increase is based on the fact that there's one party which needs to keep the rights – Seven – and another which desperately needs them in Ten. Making it more interesting is the fact Ten chief executive James Warburton understands as well as anyone the benefits the Australian Open brings Seven and is in real need of a positive story. For Tennis Australia, the commercials of the future rights deal need to focus more on what the tennis brings the winning network after the game has concluded, and less on the revenue the event brings during its 14-day tenure.

The big benefit of the Australian Open rights for the broadcaster is as a marketing vehicle: a springboard for the year ahead. Seven has followed this strategy for the past decade with stunning results. For the best part of the past 10 years it has been untouchable in the ratings battle, with the tennis playing a big role. The Open allows Seven to promote its suite of 2013 programming heavily at scale, at the absolute key period for enticing viewers. Let’s not forget, in week two of the 2012 Open, Seven had almost double the viewers of its nearest competitor, and more than double of Ten. The tournament literally sucks the oxygen out of the market and makes it extremely challenging for the other networks to promote their new offerings via their own channels.

As a result, Ten – and to a lesser extent Nine – are reliant on external channels to raise awareness of new programming, which comes at a cost. Seven can simply rely on its own airtime. In 2012 it successfully used this strategy to promote My Kitchen Rules, Please Marry My Boy, Home and Away and Revenge – all of which were strong ratings performers. It would be difficult to put a value on what this marketing channel and springboard brings the network, but a conservative estimate would be around the $5-8 million mark in terms of what it brings to ensure widespread awareness of key programming and strong first episode viewership.

Seven has also leveraged the tennis incredibly well within its Yahoo7 asset. Sponsorships are sold across platforms, which results in the majority of TV sponsors extending their commitment into the digital channel. Constant promotion of the Yahoo!7 destination, as well as additional content and information related to the tennis, pushes traffic to the sites and integrated content builds for advertisers, adding even more revenue. Seven’s promotion of the Yahoo!7 tennis content is best in market and generates real value. Adding to this, the Australian Open serves as the flagship event for Seven’s interactive TV/mobile app Fango. Fango can be a ghost town at times throughout the year, but shows its potential during the tennis with strong engagement. Fango is being heavily promoted during the 2013s coverage and usage is impressive (over 157,000 check-ins on day one alone). This is taking air away from Ten’s Zeebox platform, which requires a compelling piece of content to hang on to.

Some have commented that in its present situation, Ten cannot afford to overbid for the tennis rights if they do become available. And that even if Ten put an aggressive offer in, Seven would most likely have first and last right of refusal and would match whatever was on the table. That might be the case, but you have to wonder how the year would pan out if Seven didn’t have the rights for the tennis, and Ten did. The Australian Open is the most important piece of programming that is up for renewal and Ten needs to put its best foot forward.

Comments on this article

Comments Policy

Michael James, Fri, 2013-02-22 04:21

The issue is that Ten doesn't really have the money to bid, nor the compelling program line-up to promote through the Australian Open.
It is consistently beaten to hot new overseas ratings winners by Seven and Nine, through those networks long-standing programming relationships with content providors in the US and UK (An Australian Open wildcard for Ten, January 15).

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