The Ten Network is determined to join the bidding for AFL rights – tipped to start at $1.75 billion – despite its weak balance sheet.
AFL insiders say it is possible Ten could bid for two games a week, most likely Saturday and Sunday afternoon matches.
The company has struggled to increase revenue since it surrendered it rights to AFL matches in 2011 under then chief executive Lachlan Murdoch, who believed they had become too expensive.
But Ten's chief executive, Hamish McLennan, said the network's appetite for sports events had increased after Big Bash League Cricket helped grow its share of total advertising revenue over summer.
"Ten has declared an interest [in securing AFL rights] and has participated in the process," Mr McLennan told Fairfax Media.
His comments came after he told shareholders at the company's annual meeting in December it would have been in a better position had it retained the AFL rights.
Live sport has become increasingly important for networks to maintain ratings as the arrival of video streaming companies, such as Netflix, splinter audiences.
But Ten has limited funds to spend on content. Although its ratings have shown signs of improvement, analysts believe the loss-making company will run out of money within two years if it does not receive a cash injection, and its fate remains unclear.
If Ten was successful in gaining AFL rights, the third-ranked metropolitan broadcaster would have until November 2016 to make its first quarterly payment to the AFL.
The network joins Seven West Media as the only free-to-air broadcaster bidding for the AFL rights. Nine Entertainment Co, which has the rights to rival code NRL, has ruled itself out.
Seven has maintained a "polite silence" about the negotiations.
"Sports rights are key pillar of success for broadcasters in the Australian market," Citi analyst Justin Diddams wrote in investor note last year.
"Premium sporting rights are increasing in importance … as a platform for cross-promoting other programming content and to secure advertising dollars across the entire schedule."
"We have witnessed firsthand the impact of losing premium sporting, with Ten's revenue share suffering since it relinquished the two weekly games of AFL rights. So, premium sports content is a cornerstone of free-to-air broadcasting in this country."
Mr Diddams said Ten "has demonstrated it can manage the production of premium sports events, via its coverage of the … Big Bash League".
The network's share of total advertising revenue jumped four percentage points in January to 24.7 per cent – its best result in that month since 2010.
But from July 2014 to last month its revenue share was flat at 21 per cent, compared with 21.9 per cent the previous corresponding period, according to Standard Media Index data.
Seven West Media pays $95 million a year for the 2012-16 AFL rights, which it holds with Foxtel, Telstra and Fox Sports. The overall deal is worth $1.25 billion and represented an average cost inflation of 29 per cent compared with the previous agreement.
Media analyst Steve Allen, of Fusion Strategy, said this meant sport rights had become less profitable.
"At the prices the AFL is at today, we don't think Seven would have made much money in first year; don't think it would have made much money in the second year. It might have started making money in third year," he said.
"We think each of these major sport rights that come up today are loss-making at the start because all of these sports rights are fully priced on fundamentals. There isn't much more than the bid price available in the market place via advertising."
He said the Big Bash League was an exception.
"Ten bought the rights to the Big Bash at a fair price that gave them some wriggle room, so from day one when it left Foxtel to free-to-air it was profitable – the AFL is not like that."
But Mr Allen said Seven had mitigated some of the challenge in the current deal by giving up the exclusive rights to four games a week.
"Seven's decision to limit how much more they paid and to allow Foxtel to dramatically increase their bid, because they got all matches live to air, hasn't had an effect on Seven's audiences.
"Yes, it's made a difference to Foxtel because they have got four extra games that they only had on seriously delayed telecast rights. They have got four more games with bigger audiences. which make their offering more compelling."
US cable giant Discovery Communications has walked away from its offer to buy the main assets of Ten Network Holdings with Foxtel. It was the leading bidder for the network, with a 23¢ a share offer, but was opposed by the company's major shareholder, billionaire Bruce Gordon, who has offered to inject $70 million to $100 million into the broadcaster.
