Just When You Think Things Couldn’t Get Any Worse For FTA TV

By - CTL
March 16, 2020
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Free-To-Air Television

By Max Maddison

As Nine Entertainment this week prepares for its half-yearly results, analysis by The Australian shows the leading free-to-air networks have wiped $2bn off the value of their TV licences since 2015.

The news comes days after Seven downgraded its interim earnings by 13 per cent, struggling with sluggish advertising revenue and a debt pile worth over $500m.

Analysis shows free-to-air networks lost $2.276bn from 2015 to 2020. Of that, Seven wrote off more than $1.84bn, with almost $1bn of it in 2015. Before its collapse in 2017 and sale to US company CBS, Ten lost $383m, while Nine wrote off another $115m.

The write downs reflect the tough conditions facing broadcasters who are struggling to get advertising share while battling the influx of streaming services such as Netflix and Disney +.

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Network insiders said the imbalance existed between commercial networks forced to meet “onerous” regulatory obligations, and unregulated digital platforms — such as Netflix and YouTube — which reap the benefits while paying no tax in Australia.

One obligation for TV licence-holders that draws regular complaints is that free-to-air channels are forced to provide children’s channels, which cost the networks millions but don’t have enough viewers to meet ratings thresholds. While these obligations were designed to ensure Australian viewers had access to a variety of Australian screen content, the shift to streaming services has left free-to-air networks bleeding viewers and advertising revenue.

A spokeswoman for Ten said broadcasters were being forced to confront the online giants with “one hand tied behind their back”.

“The ACCC inquiry into digital platforms highlighted these glaring inequalities and we remain hopeful the federal government is serious about reducing these imbalances,” she said.

However, the discrepancy between Nine and Seven West Media TV licence write downs highlights the struggles of the Kerry Stokes-owned media outlet.

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Falling revenue and increasing costs across the board saw underlying earnings before interest and tax fall by 21 per cent to $119.7m from a restated $151.1m in 2019.

The troubles were underlined by the $165.6m TV licence impairment, including “onerous contracts” such as the payment of cricket rights. Since 2015, the value of Seven’s shares plummeted by 87.81 per cent from $1.559 to 18.5c.

In a statement, Free TV CEO Bridget Fair said commercial television channels were being forced to meet “outdated” obligations.

“Free TV broadcasters have been operating under a regulatory framework developed last century, while trying to compete against unregulated digital platforms for advertising revenue and audience attention,” Ms Fair said.

“It is hard to overstate the pressing need for immediate action, and outdated content quotas are right at the top of our list.”

Research by Roy Morgan in 2019 revealed that almost 14 million Australians paid for subscription streaming services, with 11.5 million of those households having a Netflix subscription.

 

 

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