Diabolical trouble? To a point, Mr Shorten
Diabolical trouble? To a point, Mr Shorten
Welcome to a midweek email from Unmade.
Today: The latest TV numbers are bad, but is Bill Shorten correct that they spell a diabolical outlook for the TV industry? And another bloodbath on the Unmade Index
Apologies for the late arrival of today’s newsletter - thanks to a combination of technical challenge, calendar (over)commitments and good old fashioned incompetence on my part (charts are a great way to hide hours of work).
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The TV networks are in trouble because of the rising cost of the sports rights that they bid up themselves
On Monday night, the most compelling television experience for the commercial TV industry was occurring on the ABC.
Four Corners broadcast its expose on the culture at the Seven Network. I’m sure it horrified the average viewer, but it says a lot that nobody within the TV world was particularly surprised by what they saw.
It also says something that when Seven West Media’s share price plunged late yesterday afternoon, and when I asked around to try to figure out what was behind it, nobody could quite say whether it was a belated reaction to Four Corners, or an early reaction to today’s full year financial results announcement.
The middle course of the night was the usual Monday ticking off for the industry from Media Watch.
However, the most memorable media moment of the day came on Q&A, when government services minister Bill Shorten attempted to defend what is looking increasingly like a government U-turn on a ban on betting ads. The TV sector is in “diabolical trouble”, Shorten argued as he made the case for keeping the ads on air.
As an aside, the nickname Minister for Sportsbet is at risk of sticking to Michelle Rowland. Accommodating as she has been so far to the lobbyists from the betting companies and TV networks, that risk must enter her calculus of what she finally does.
Yesterday ThinkTV, the marketing body of the TV industry, released its annual numbers. Again, no surprises. Monthly agency spend data from SMI Guideline has kept the market well aware of how the TV networks are tracking.
The ThinkTV data captures spend on TV advertising across broadcast and streaming by the main three commercial networks of Seven, Nine and Ten. It doesn’t include SBS or the global streamers, and Foxtel left the metric when it resigned from ThinkTV in June last year.
Advertiser spend with the networks was down 8.1% to $3.4bn. The metro broadcast sector went backwards the fastest.
Yes, that’s bad.
But is it diabolical?
Since the industry started sharing its data in the current format, this is how the trend looks.
Five years ago, the networks had a $4bn industry. Now it’s worth $3.3bn.
On its own, the drop in broadcast revenue looks frightening.
But bear in mind that ThinkTV has stopped reporting Foxtel Group’s data, after the company broke up with the TV industry, resigning from ThinkTV and OzTam.
The graph doesn’t look quite so terrible once you strip out the national number accounted for by Foxtel.
Foxtel has also contributed to the BVOD (broadcast video on demand) number which explains why that temporarily went backwards in FY23. Now it’s back in growth, however you measure it.
The wider BVOD numbers are a case for optimism - from $93m in FY18, to $441m this time round.
There is a point where BVOD becomes a $1bn revenue line for the networks, even though they will have to fight the advertising tiers of Netflix, Prime Video et al to hang on to it.
So why then does Shorten use the phrase “diabolical” to describe the state of TV? That will have come from the networks’ own lobbying as they argue for further discounts on what they pay to access spectrum and for mercy on the betting crackdown.
Yes, it’s true that audiences - and therefore advertising revenues - have declined.
But the biggest factor is a problem of the own networks’ making. They’ve bid up the cost of sports rights even faster than their advertising base has shrunk. That’s what crunches profits in a diabolical way
They can’t blame the market for that. They are the market.
Bad day on the index
It was a seriously down day on the Unmade Index yesterday, with a drop of 3.57% to 474.3 points.
Seven West Media had the worst of it, falling by more than 10% at one point, before landing on a daily decline of 8.82%. Fellow TV network Nine lost 4.58%. Southern Cross Austereo lost 5.34% and ARN Media dipped 4.29%.
Time to leave you to your afternoon.
We’ll be back with more tomorrow.
Toodlepip..
Tim Burrowes
Publisher - Unmade
tim@unmade.media