Discussion On Free-To-Air Channels Essay

Question:

Analyse Free to Air Channels Right Fee Sport Broadcast.

Answer:

Introduction

Soccer is one of the most watched sports globally, especially during weekends when most people are not at work (BLISS, 2013). This game is widely broadcast via Televisions and radio channels worldwide. These broadcasting networks can provide commercial services or free-to-air (FTA) services while broadcasting this game. This report entails an evaluation and analysis of an Australian Football league one hour match featuring Adelaide Fc vs Brisbane lions that was aired live on Foxtel channel 7 (Guthrae, 2015). This is one of the FTA channel in Australia that broadcast soccer games live (Industry, 2016). During the broadcast the channel runs various sponsors’ advertisement within the 120 minutes allocated for each soccer match. For an FTA channel such as Foxtel channel 7 to broadcast such game via broadcasting network for free it has to take some considerations on how to compensate for the network fee charged while airing the game, thus the use of advertisements (OECD, 2013).

During the one-hour game between Adelaide Fc vs Brisbane lions, the following adverts were displayed at different intervals; Coca-Cola, CrownBet, SportsBet, Toyota, Gatorade, Carlton Draught, Woolworths and nab. Amongst these Cocacola appeared twice, while SportsBet and CrownBet appeared once each in the first 45 minutes of the game. The rest appeared after the first half during the first half analysis of the game where Toyota appeared twice while Gatorade, Carlton Draught, Woolworths and nab appeared simultaneously each once while still in half time. The duration at which advert were being displayed was exactly 30 seconds. The events were displayed in a manner whereby some appeared scrolling at the bottom of the screen when the game was still in play while others were displayed in the main screen taking most part of the screen actually like three-quarter of the screen window used (Poggi, 2016).

Adelaide Fc versus Adelaide Fc vs Brisbane lions

Time Interval (Minutes and Second)

Event

00:00-07:27

Game in play

07:28-07:58

Game in play with a SportsBet scrolling advert at the bottom of the screen

07:57-18:23

Game in play

18:24-18:54

Adelaide Fc Goal replay with an advert of Coca-Cola

18:55-30:12

Game in play

30:13-30:43

Game in play sharing the screen with CrownBet advert

30:44-44:07

Game in play

44:08-44:38

Brisbane lions equalizer goal replay with a Cocacola advert

44:39-46:00

Game in play and the blows the first half whistle

46:01-48:03

Major highlights on the first half match

48:04-55:04

The adverts appear simultaneously in the following: Toyota, Gatorade, nab, CrownBet, Carlton Draught, SportsBet, Woolworths and Cocacola. This was repeated in the same order as indicated above

55:05-60:00

First half match analysis

From the above footage timeline, the game is underway for seven minutes without advert disruption. Then SportsBet advert scrolls at the bottom of the screen for exactly 30 seconds while the game is still in play. Between 8th to 18th minute there was no advert being displayed. At 24th second of the 18th minute to the 54th second a Cocacola advert appears taking half of the screen from the left during Adelaide Fc’s goal replay. The game continues to play with no adverts for about 12 minutes when a CrownBet advert appears for exactly 30 seconds taking the bottom part of the screen. From 30th minute to 44th minute the game plays with no adverts displayed. At the 8th second to 38th second of the 44th minute of the match a Cocacola advert appears after Brisbane Lion Equalizes Adelaide Fc’s goal. Then the game continues until the 46th minute when the referee blows the whistle for half time.

At the 46th to 48th minute major highlights of the first half match such as shot on targets, best saves and goals scored were displayed. This was followed by a series of adverts taking exactly five minutes i.e from 4th second of the 48th minute to 4th second of the 55th minute. The adverts were in the following order - Toyota, Gatorade, nab, CrownBet, Carlton Draught, SportsBet, Woolworths and Cocacola respectively. This was repeated in the same order for a second time. Then the first half match analysis began at 55th minute to 60th minute before the game was underway for second half.

Cost of Rights Calculation

From The Australian website, AFL signed a contract with Foxtel Channel seven where Seven Channel paid $840m for the free-to-air network fee for a span of six years (DAVIDSON, 2016). This translates to $140m per year in which in a year the channel is supposed to broadcast 34 soccer games. The cost for network fee for an hour soccer match can be shown in the calculation below.

$140m - > 1 year (broadcast 34 games)

Thus,

1 game = $140m/34 games

= $4m/120minute of the game.

Therefore, for 1-hour match broadcast network fee as per the contract

=$4m/2 hours

=$2m.

Considering the number of supporters both Adelaide FC and Brisbane Lion Fc has globally, this translates to large number of viewers. Hence, the cost of adverts displayed during the match will be higher than normal depending on the organization. Thus the total amount charged for all adverts by Foxtel channel seven in the 1-hour match broadcast is as follows:

For:

Cocacola -> $190,000 per 30 second

Appeared 4 times hence

$190,000*4 = $760,000

For:

Toyota - > $180, 000 per 30 sec

Thus,

$180, 000*2 = $360, 000

For:

SportsBet and CrownBet -> $100, 000 per 30 sec each

Appeared thrice each, thus

($100,000*3 )*2 = $600,000

For:

WoolsWorth, nab and Carlton Draught -> $100, 000 per 30 sec each

Appeared twice each, thus

($100,000 * 2) *3= $600, 000

Therefore, the total amount generated from the above adverts for just one hour of match play is equivalent to:

$760,000+$360, 000+$600, 000+$600,000

= $2.32m

From these calculations, Foxtel channel Seven is able to receive a total of $2,32m revenue from airing various company’s adverts during the match between Adelaide Fc and Brisbane Lion. This amount exceeds the cost charge for broadcasting network fee of $2m by $320,000 in one hour. This therefore means that Foxtel Channel Seven is able to recoup the network fee it paid for one hour broadcast as well as making a good profit of $320,000 as shown in the calculations from the frequent adverts.

Conclusion

From the above explanations it is therefore right to conclude that Free-to-air channels are able to compensate the amount of fee paid for broadcasting channels from the number of adverts displayed during sports such as soccer matches (Wun, 2016) . Also apart from recouping network fee amount, they are also able to make profits from the amounts collected from the same adverts as seen in the AFL Adelaide Fc versus Brisbane Lion aired on Foxtel Channel Seven.

References

BLISS, K., 2013. Livestrong. [Online] Available at: [Accessed 20 August 2017].

DAVIDSON, D., 2016. Football fever will cost advertisers more. Adelaide Fc: The Australian.

Guthrae, T.K.a.B., 2015. AFL signs new six-year, $2.5 billion broadcast rights deal. Adelaide Fc: AFL.

Industry, F., 2016. AFL and NRL Grand Final Advertising Costs. What happens off the field in Australian Football, pp.1-5.

OECD, 2013. Competition Issues in Television and Broadcasting. Research Paper. Bulgaria: OECD Global Forum.

Poggi, J., 2016. TV Ad Pricing Chart. A show in its 13th season returns to the top 10 most expensive buys, pp.1-12.

Wun, C., 2016. Top 10 priciest shows on broadcast for advertisers. pp.1-2

How to cite this essay: