Seven West Media Ltd (ASX: SWM) was the biggest mover on the ASX200 on Friday, up 12% to $0.58c following the announcement that the company will sign a $1 billion deal with Cricket Australia for cricket broadcasting rights over the next six years.
Seven West Media submitted a successful joint bid with Foxtel, beating the offer from Network Ten. Earlier today, the other competitor Nine Entertainment Co Holdings Ltd (ASX: NEC) – which secured tennis broadcasting rights two weeks ago – had confirmed rumours that it had dropped out of the tender. Nine's share price dropped heavily following the announcement, then rebounded to yesterday's closing price of $2.25.
The deal runs until 2024 and includes domestic free-to-air broadcast rights to:
- most of the Big Bash League matches, including all marquee matches and finals, all in primetime
- all home international tests, including the 2021-22 home Ashes series
- the main Women's Big Bash League and International matches
- the Allan Border Medal and Belinda Clark Award, the two most prestigious individual prizes in Australian cricket.
The annual cost for Seven is $75 million per annum, while Foxtel will pay $100 million per annum for simulcasting the matches offered by Seven on free-to-air. It will also have the exclusive right to broadcast all other Australian cricket matches on pay television.
Seven – which already has rights for the AFL – describes the deal as historic: for the first time the same free-to-air network will offer both summer and winter premium sports in Australia.
Foolish takeaway
$75 million a year may not seem that cheap, but consider Nine agreed to pay $60 million for tennis, which includes the Australian Open, but on aggregate doesn't span as many hours as cricket.
It really is an historic deal for Seven West Media, and it is guaranteed to boost advertising revenue, but I'm curious to see how the recent Australian Men's Cricket team cheating scandal will affect the sport's following.
