Monday sees the 2006 figures for TV ad revenues released and the interest will be if Nine has managed to stave off Seven, thanks mainly to the success of its cricket coverage since late November.

Nine was around $2 million ahead of Seven at the halfway mark at the end of June and pulled ahead in the second half as Nine discounted heavily to fill its inventory. Seven had a consistently better mix of higher rating and premium priced programming in the second half.

Nine ended up the narrowest of winners on a share of TV viewing basis but Seven reported at its annual meeting in late October that earnings would be up 30-40%. There was no such forecast from PBL at its AGM.

Some analysts think Ten will get back close to its target 30% share of revenues (maybe 29-29.5%). Brokers Credit Suisse said in a note to clients today:

We have revisited our earnings forecasts for the Australian TV sector following industry feedback on revenue shares over the past six months and the outcome of the annual ad rate negotiations.

We estimate that in the June to December half, TEN’s share of TV advertising fell to 29.5% from 30.9% in the previous corresponding period. This, together with our estimate that the ad market grew at just 1.5% for the December half, has resulted in an estimated 3.0% fall in TEN’s ad revenues in that period.

As a consequence, our FY07F forecasts for TEN have been revised down by 5.5% to take into account our expectation that the total TV market will only grow at 2.5% in FY07F. We have, however, taken a more positive view on TEN’s advertising share, with industry feedback confirming that the network had secured rate rises of around 5.0% and advertising share commitments of 30% for calendar 2007.

As a result, we are forecasting TEN to command 29.7% of TV advertising in FY07F before reverting to 30% from FY08F.

And earlier in the week Goldman Sachs JB Were said it believes Seven will surpass Nine this year as the number one network:

We believe the return of the AFL, in combination with a solid schedule of local and US programming, should be enough to propel the Seven Network ahead of the Nine Network in 2H07. Although we believe Nine will withstand the loss of AFL better than Seven did in 2H02 (i.e. Nine retains broadcast rights to the NRL, cricket, and other special events) we remain cognisant that five of Nine’s top 2007 US series prospects have already been cancelled mid-season.

In other words, Nine may struggle with its core schedule during 2007.

It also expects pay TV to maintain its momentum: “With audiences and advertisers chasing niche offerings, pay TV will continue to erode the FTA dominance of television audiences during 2007 as penetration increases and advertising share grows.”

Peter Fray

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