Seven's Broadcast Bargain

Alex & Mark from Analyst Economy
August 22, 2023

Hi there,

Coverage of the Matildas’ incredible TV numbers has been extensive, and rightfully so! Rather than give you more of the same, we thought we take a different tack and present a different but equally mind-boggling story - how Ch 7 may have landed the greatest TV rights deal ever.

As always, we encourage you to share this to anyone inside or outside your organisation and we welcome any thoughts, questions or criticisms.

To check out our other articles, click HERE.

Alex & Mark

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Did Channel 7 land the greatest broadcast deal of all-time?

Channel 7 took a gamble on the domestic TV rights for the FIFA Women’s World Cup but, as it turns out, the odds were stacked wildly in their favour. At the reported price-tag of $5M, even if the Matildas had bowed out in the group stage (unlikely), the price would be considered an incredible deal by recent standards set by the market.

As it happened, the tournament delivered Ch 7 an audience that would command an approximate rights fee of $60M by those same standards, a 12X return on their investment. Not bad….

We’ve written previously (article) about sport’s importance as a content differentiator for Free-to-Air networks and how to approach a rights valuation. So, let’s break down how we arrived at these numbers…

Matildas’ games generated 24M cumulative audience for Network 7 – only the AFL, NRL and BBL have higher cumulative audiences as leagues within Australia, and that is accounting for entire seasons of those properties!

Including non-Matildas matches, the entire tournament delivered 30M cumulative viewers to Network 7 - an extra 25% from other matches

The AFL and NRL generate over 20 times the fee for their free-to-air rights despite only delivering approximately 2 times the cumulative audience - this works out to be an approximate price of $2 per cumulative viewer. At $5M, Ch 7 only paid a price of $0.16 per viewer - 8% of the market rate!

Applying this rate to the 30M viewers for the tournament, we can impute a real rights value of c. $60M - 12 times more than what was paid by Ch 7. Put another way, the $5M rights would have an expected cumulative viewership of about 2.5M, which the Matildas nearly delivered in the first game of the tournament!

Australia’s success quadrupled their viewership – the audience from the three Group games was 5.9M, with +18M coming from the knockout stages (due to the team’s progression through the tournament).

This would suggest that even if the Matildas had failed to get out of the group stage, the tournament would have generated at least 10M viewers to Ch 7, a market value of $20M, 4 times what was paid. Deal-of-the-century somehow seems an understatement!

It is worth pondering why these rights were so under-priced:

Rapid growth - The enormous growth in popularity of women’s sports since the last WWC made it hard to accurately predict the public’s appetite for this content before the fact. Think about well established leagues such as the AFL and NRL - viewership for these properties typically vary by less than 5% year-to-year making it a far simpler to project and accurately value the future TV rights.
Variable outcomes - As we have shown above, there was a large range of outcomes depending on the performance of the Matildas. Just imagine if they had made the Final - we could be talking almost a 4X difference in viewership from a worst-case to best-case scenario. The traditional model for broadcast deals means that it was only Ch 7 who stood to gain from the upside of a deep run by the home team. Why can’t we explore alternative rights models where risk and upside is shared by multiple parties (including the team/nation federation). Surely the team deserves a share in the spoils generated by their incredible performance?
Under-valuing of women’s sport - sponsorship investment in women’s sport is still only 12% of men’s, according to a recent Change Our Game report. The FIFA WC has shown the upside for broadcasters, but these same principles apply to sponsors too. Channel Seven also backed their investment by putting (most) content on its primary Seven channel - hopefully broadcasters will do more of the same in future - giving women’s sport the exposure it needs to further realise its growth.

Thanks for reading. Please feel free to reach out with any questions, and if you enjoyed reading, please share with friends and colleagues.

All analysis contained within this document is strictly non-commercial and has been derived from publicly available sources. To access more comprehensive data and insights tracking across the sporting landscape, reach out direct to [email protected] or [email protected]