Analysis: Aussie TV needs to go ultra local to survive

BY Ahron Young

There used to be a photo hanging in the walls of Channel Nine in Bendigo St Richmond. 

Hundreds, HUNDREDS, of staff at the 40th birthday celebrations. The photo was taken in 1996, in the last days of variety television. Franky J was hosting a resurrected In Melbourne Tonight (can you imagine having a Melbourne only big budget tv show these days).

This week saw a slew of financial announcements from Australia’s major media companies. For traditional broadcasters, it’s a tale of continued uncertainty.

The newspapers went through the same pain ten years ago, and while TV declined, the argument has been “it’s still the only place you can get a million people watching the same thing at the same time”.

TV is probably the most competitive industry in the world. Notice how our three main broadcaster are never making a profit at once? Right now Seven West Media has over $500m debt with a share price hovering around 18 cents (form from $15 13 years ago). 

Before Seven’s current bout of financial pressure was Ten – Nine went through the debt disaster a few years earlier.

VIEWERSHIP DECLINE

So let’s look to the US for an industry wakeup call. Networks have suffered a 9.4% decline so far this year. This year! It’s still February! Cable lost 6 million subscribers last year (Foxtel has just under 3 million in total).

In a world where internet has become king, it almost seems quaint that we have a broadcasting tower atop Mount Dandenong sending out a wireless signal across the land.

5G IS HERE – JUMP ON

So let’s look to Germany.

The participants of German research project 5G Today, in which linear TV was transmitted in 5G broadcast mode for the first time, have drawn a positive conclusion.

“We were able to achieve good mobile TV reception in large parts of the measurement area. These findings form an important basis for further standardisation work on 5G broadcasting,” said the project manager.

That’s right, Germany is in the process of transitioning its TV networks to 5G. How long until we do the same?

NO LONGER US v THEM

Until now, for TV networks, it’s been “us and them”. “Us” is the broadcasting licence holders or billionaire satellite broadcasters who once ruled the waves, and “them” were anyone who was, well, anybody else.

There were the Princes of Print and the Queens of Screen. Never the two shall meet. Until the internet. Now newspapers make video content, and TV stations run news websites. 

To survive is to have the biggest brand.

LICENCE FEES

Typically, those at greatest risk call for change first. Stephen Conroy (then Comms Minister), was wined and dined by Seven owner Kerry Stokes in Aspen, who told him the licence fees were worthless these days. It happened. In fact most the write downs you see in the TV network financial reports are due to write downs on the value of the broadcasting licence. Conversely, many of their profits come from the fact they don’t pay much in licence fees anymore.

Which brings us back to Germany. Essentially, it’s becoming open slather. 

Content is king in this new world. Finding a niche is key. 

FOLLOW RETAIL TRENDS

Seven, Nine and Ten remind me of Myer and David Jones. They try to be all things to all people, whereas Westfield (let’s call them the NBN) houses so many smaller retailers they are killing Myer’s business model. David Jones this week announced its having robust conversations to shut down more stores.

US TV MARKET

In the US, the streaming world is booming. We only really hear of the big companies or movie studios launching streaming services (Comcast, WB etc) – but there’s SO much more going on.

Crucial to this is technology. TV controls rooms used to require five or six people to get ONE show to air. Eight hour shifts meant they were there for the 6pm news, and launching a local brekky show in every market was prohibitive.

But the new systems pioneered by Euro broadcasters now allow for one person operations. One person is the producer and director! 

So for the same price as one show at 6 under the old system, you can now have five or six local news programs a day, with half the production staff. I’m not celebrating the loss of jobs, I’m saying those jobs need to be used differently.

KEEP IT LOCAL

When Seven announced last year it was axing its Melbourne publicity department, I rolled my eyes. I felt the same when Foxtel axed the ASTRA awards. Why kill the thing that makes you different, when your biggest competition, Netflix, has barely any LOCAL presence?

Australian cities are growing rapidly, so why are we centralising? In a world of flashy competition, you need to spend the money where your customers can see it. Less back end, more versatility.

In the US, CBS is launching LOCAL streaming news channels in every market it owns a network. Can you believe that? This week, CBSN Denver launched. Denver has a population of 619,000 people. Adelaide hovers around a million.

For TV networks, the reliance on traditional revenue is going to send them over a cliff. One analyst asked whether Seven can make it to the end of the ratings year. It’s been a REALLY tough start to the year for many businesses, worried about fires and coronavirus. No one is spending money.

TV RIGHTS

Which brings me to sporting codes. The AFL should be worried. Seven declined the offer of continuing its current broadcasting deal for another two years. Foxtel has a debt pile of over a billion dollars, also running at a loss. Kayo subscribers declined.

Sports codes need to stop relying on TV network income. The old model is coming to an end very fast. They too, should be looking to streaming and direct to customer. 

INDUSTRY WIDE

One of the key problems is the advertising agencies. They essentially control the direction of tv networks. And they aren’t juiced up by the idea of streaming. While the Aussie networks have all launched VOD and in some cases OTT services, they aren’t being supported with the same revenue from advertising agencies. Same with their websites. A full page newspaper ad still makes more revenue than a 8×6 spot ad on a news website.

That is holding the industry back. Consumers are deciding, and they’re not loyal to networks anymore.

Stay local, because the eyes have it. And it’s never been easier to do it.

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