Cricket Australia, Channel 7 TV war to financially destroy broadcaster

Channel 7 stands to lose the equivalent of almost half the value of its station if it broadcasts cricket this summer.

It is understood Seven lost more than $60 million on cricket last summer and it has been forecast the damage will be much greater in a COVID-challenged summer if it proceeds with the third year of a six-year deal.

Seven, valued at $177 million at close of business on Friday, has informed Cricket Australia of its intention to terminate the deal in a letter delivered last week.

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Channel 7 will be cut in half if it airs cricket this summer.

Seven is due to pay $25 million to CA on Tuesday as part of a routine instalment of its $85 million annual fee but is likely to resist making the payment which will leave Australian cricket in crisis.

While it has been interpreted Seven’s prime concern behind the move is to agitate for a reduced rights fee, sources close to the station have confirmed that the network has not taken the court action likely and is prepared to end its brief association with the game.

CA has so far stood firm on rejecting a rights deduction.

Seven CEO James Warburton. Picture: Nikki Short

If debt-challenged Seven continues as a broadcaster it faces another challenge in trying to sell advertising for it’s cricket package.

With money so tight due to the COVID crisis it would be the toughest of hard sells to promote a product the station’s bosses feel is on the nose.

Seven is set to argue in court the Big Bash is declining in value due to the absence of a string of big name players due to COVID bubbles.

It will also contend the travelling Big Bash hubs dilute the quality of the product because matches played in neutral venues will lack the big crowds which have been such an important feature in the competition’s success.

Seven were aware Channel 9 lost more than $40 million a year in the closing years of its deal but Seven still bid for the product even though there were growing concerns about its value.

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Free-to-air stations have long accepted they would make a loss on the cricket but have seen it as a loss leader because it allows them to promote their shows for new ratings season.

Cricket Australia had initially planned to launch the Big Bash and the four Test series against India on the same day but that will now be impossible with the Test series likely to start several weeks late in mid-December.

Seven had suggested to CA it might consider abandoning the Big Bash for a year but there is no chance of that for CA is determined to fulfil its contract-guaranteed 59-match schedule.