Vultures circle as Seven, Nine and Ten guard their major sports

At first glance, it makes no sense: our biggest TV networks – battered by declining audiences and revenue – keep splurging record sums on live sport. What's more, these sports don't always turn a profit. According to some analysts, commercial channels lose tens of millions each year on cricket and tennis.

Why on earth do they persist?

The answer can be found in Wednesday's ratings, with the Blues versus Maroons Origin clash averaging 3.46 million viewers nationally. At its peak, almost 3.9 million people were watching Channel Nine or an affiliated regional station.

In 2018, such numbers are staggering.

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A decade ago, prime-time programs were in peril if they dipped below the "magic million" mark in capital cities. Now, it's common for most top 10 shows to draw fewer than 1 million viewers. Sometimes, the only exception is the news on Seven and Nine.

Little wonder the networks brawled over major sports earlier this year. Nine snatched the tennis from Seven – which grabbed the cricket from Nine, via a joint bid with Foxtel. And Ten (despite being owned by US network CBS) failed to keep the Big Bash cricket, one of the few ratings bright spots in its summer schedule.

When a network spends big on sport – including AFL, Origin and the Olympics – they're buying more than just big ratings. What they're really interested in is a big platform, from which they can promote other prime-time programs.

No one creates a list of pros and cons when deciding which shows to watch. Part of the reason My Kitchen Rules is so successful is that Seven advertises it relentlessly during the tennis. Some people with little interest in MKR get drawn in by the juicy promos and, over time, became regular viewers.

This also explains why Ten has struggled in recent years. With fewer viewers to begin with, even their best shows rate lower than they would on Seven and Nine. Large audiences beget large audiences – and if a network doesn't have them to begin with, it faces an arduous struggle. (Of course, even a massive lead-in audience cannot save a truly terrible program.)

News bulletins are equally important, because they deliver reliably strong ratings each night. If you're tuned into Nine at 6pm, you'll be bombarded with ads for The Voice. That's no guarantee you'll actually watch – but it does make it more likely.

The problem for commercial networks is that vultures are now circling, ready to swoop in and steal their dinner.

In the US, the largest sporting codes are increasingly streaming their games direct to fans for a small fee. Some believe they can make more money this way – while also retaining more control.

Streaming services such as Netflix and Stan, a Nine-Fairfax joint venture, are paying close attention. Not to mention Google, Amazon, Facebook and other digital giants.

Exclusive rights to a major sport would deliver a double windfall to them: a stampede of fans signing up, creating a bigger customer base to promote their other products to.

Don't expect the footy to pop up on Stan overnight, though; existing rights deals will be in place for some time yet. And Australia's anti-siphoning laws ensure free-to-air networks have first dibs on significant sporting events.

But the long-term trends do not favour traditional broadcasters; there's a limit to how much they can spend on sport. And while their cash piles are diminishing, the digital giants grow exponentially richer.

In the not-too-distant future, most of the world will seamlessly stream content to their 16K-resolution screens. In Australia, we could be stuck with lags and endless buffering for some time, thanks to our rickety NBN. But once (if?) this is fixed, the battle for sporting rights will become even more intense.

A word of caution: our dominant codes cannot be too greedy. Fans expect to watch certain games for free; if they're asked to pay, many will get angry. And just as TV networks require large audiences to sustain themselves, so do big sports.

"The reason sport is so successful in Australia is because lots of people watch it," says one cricket executive. "If you move these sports to [platforms with fewer viewers], you might shoot yourself in the foot."

Michael Lallo is a Senior Entertainment Writer for The Age and Sydney Morning Herald. Michael joined Fairfax Media in 2006 as a feature writer. He has also been a news reporter for The Sunday Age, a deputy editor of Green Guide and a columnist and critic.

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