With the AFL radio broadcasting rights set to expire at the end of 2006, the battle for the new radio rights spanning 2007 – 2011 promises to be intense.
Current AFL radio rights holders keen to renew include the ABC, Austereo (Triple M) and Southern Cross Broadcasting (3AW).
The rights will be keenly contested by new entrants DMG (Nova) on the FM band and Pacific Star Network (SEN) on the AM. Pacific Star Network, the owner of the Melbourne based business of SEN, trades on the ASX under the stock code PNW.
PNW last traded at 9.6c, up 0.4c or 4.1% from yesterday’s close. This equates to a fully diluted market capitalization of $39.5m.
There is no disputing that SEN has and continues to be under financial pressure.
Since the very beginning the prospects for SEN looked very bleak without having any broadcast rights to any sport. However, the last few years has seen SEN build valuable brand awareness and form close strategic relationships with key sporting codes which is seen as critical to the long term growth and success of the group.
Without any live sports broadcast, SEN has had to rely merely on their entertainment value and commentary on sports as their sales package to media buyers. No one disputes that SEN’s line-up of media savvy personalities is impressive, and includes personalities such as Tim Watson, Billy Brownless, Kevin Bartlett, Andy Maher, Mark Doran, Anthony Hudson, David Schwarz and with the occasional special comments from Brian ‘Straughnie’ Straughn.
The fact that SEN has struggled financially and survived would come as a surprise to some.
In 2004 well respected advertising buyer Harold Mitchell commented that it would be difficult for SEN to sustain sales momentum when they initially attempted to attract advertisers with their ‘free introductory offer’.
“All of the other talk stations have established audiences and major revenue streams,” he said in 2004. “Survival will be difficult”.
Survival for SEN has been difficult and now with a seat firmly at the negotiating table for this round of broadcast rights, those that are in competing corners are starting to become nervous.
Media personality Rex Hunt said on 3AW last Saturday, “I honestly believe that 3AW is a real chance to lose the football to a station that will be dictated to by the AFL”.
Andrew Demetriou, the AFL’s Chief Executive Officer, hasn’t ruled out the possibility of the AFL becoming involved in operating a commercial radio license.
“We are going to explore different business opportunities in the industry that allow us to explore more options for the AFL and on behalf of our clubs that relate to equity positions or strategic alliances with broadcasters, ie, pay-TV, radio and other things. You have to read in to that what you want,” he told the Herald Sun in May last year.
In July this year, the AFL’s Senior Executive in charge of broadcasting, Ben Buckley, confirmed to The Age that the AFL was considering buying a stake in SEN.
“SEN are interested in bidding for all the packages we have on offer and we are looking at a relationship with them,” Mr Buckley told The Age.
In a public announcement made to the ASX on the 7th July this year, PNW confirmed they were, “interested in securing the forthcoming AFL radio broadcasting rights,” and that they were, “actively pursuing this opportunity”.
If the AFL were to take an equity stake in SEN and provide them with the funding and content they so desperately require, then the fight for survival may become a thing of the past.
The outcome of the AFL radio broadcasting rights is expected to be known within a month.
Noel Crowe, Sport 927 General Manager, commented when SEN first joined the market that, “Content is king in radio, and if you haven’t got content, it doesn’t matter if you’ve got the highest-profile ex-AFL footballers and commentators, it just won’t work”.
The AFL certainly has the content to make SEN the king.
PNW Price at posting:
0.0¢ Sentiment: ST Buy Disclosure: Held
