The financial cost of the disaster wreaked on the Nine Network by
years of meddling in management and operational areas by the Park
Street head office of the Packer Empire is now becoming quite apparent.
Nine’s first half ad revenue slipped 6.1% to $462 million, while
Seven’s rose more than 14% to $460 million and Ten’s plunged (as
expected) 11.5% to $341 million.

Nine’s drop, in the
quietest period of the year, came in a market that fell 1.23%, despite a boost from the Commonwealth Games in March, which bolstered
the market and Nine’s share (and hurt Ten, which had a miserable
March). Strip that figure out
and the market probably contracted by around the 1.7% it fell in the
more lucrative July-December period of last year. That means that without
the Games, Nine’s drop would have been larger and would have taken its ad share
below its ratings share.

As it was, Nine’s revenue
losses accelerated in the July half: in the December half PBL reported that
Nine’s revenues “decreased by 4.6%”. This fall of 6.1% (which in reality is larger
because Nine lost money on the Games even after a $20 million write-down in the
2005 result) means the network is facing its worst ever share figures in the second half of the year.

industry analysts are mixed on what the next half will bring. The market is still “short and soft”, meaning
advertisers are only doing short term deals and trying to maximise their power
by negotiating lower rates.

Nine (and
Ten to a slightly lesser extent) is discounting its ad rates to try and fill
space and drive revenues. Nine has had to do “make goods” over the Footy Show
World Cup broadcast that fell short, and is facing the prospect of a similar
arrangement for the expensive Dancing on Ice if its
ratings don’t kick higher soon.

The industry
expects Seven will again boost its ad share (and its viewing share slightly) in
the run home to the rich Christmas spending period.

Ten will bounce, its
share is forecast to rise from the low 27% in the June half (the $40
million drop in revenue was a surprise to many in the industry, but also shows
just how low Ten’s costs base is because it is still making a dollar or three)
to around 29% this half. But that will depend on
the performance of Australian Idol in particular.

But for Nine, there’s a
bit of confusion. The bluster at yesterday’s mid-year launch from
Eddie McGuire about the great new programs was not encouraging: apart from the
20 to 1 spin-offs the rest are not great audience grabbers. The
main selling point was the cricket and the Ashes telecasts, which will make for
a very lucrative summer of advertising for Nine. But the games will be out of
ratings and will be finished by 6pm or thereabouts most days (except for the
one day internationals in January and the Twenty20 games).

ability of the cricket to influence Nine’s revenue and viewing shares for the
official ratings battle is hard to see. Some
analysts say there’s a chance Nine’s revenue loss might slow this half but its
share might tip to 35% from 36.58% in the June

Overall the five city
metro markets saw ad revenues fall to $1.262 billion from $1.277.8
billion in the first six months of 2005. An overall fall of $15 million, but the result that was clouded by the Commonwealth Games boost.

five markets – Sydney, Melbourne, Brisbane,
Perth and Adelaide – suffered a fall in revenue with
Melbourne the biggest loser: its market contracted 2% despite the
Commonwealth Games. Sydney
was off 1% and remains the biggest TV ad market in the country with
revenues of $467.6 million. Melbourne’s were $353.1 million.

Regional Australia, however, saw a 4% rise in revenues to $370.64 million in the latest six months. Regional
Queensland saw
revenues jump more than 6.4% to $87.2 million.

Peter Fray

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