Southern Cross Broadcasting has the reputation of being one of the most ruthlessly run media groups in the country but it is powerless to do anything against its major irritant at the moment: the indifferently managed Nine Network.
In the face of a downturn in advertising revenues at its Sydney radio station, 2UE, it chopped more than 20 jobs last June and in February and March had cleaned out more than 20 TV executives and support staff.
2006 went down as the year of the knives at SBC and then in November, the company, which was on everyone’s list as a marriage partner (forced or otherwise) was raided by Tim Hughes’s Macquarie Media, which paid $16.50 a share for the 14.9% stake.
The deal looked very clever, but was it?
The ad revenue figures for Australian radio and for the TV industry for 2006 show that Hughes badly misjudged his timing: had he waited until today he may have picked up his stake for significantly less, despite all the media speculation.
SBC looks like being the one listed media group to have suffered the greatest damage from the very mixed fortunes in broadcast media in this country, especially the loss of revenue and ratings by the Eddie McGuire-run Nine Network.
Its profit and loss woes look like being second only to those at the Nine Network (which is not listed, being half owned by PBL and CVC in PBL Media). Another disaster area is evident in Perth with losses forecast by Sunraysia TV at its station, STW9.
Nine lost share and ad revenues last year: around $40 million in the second half alone in the five metro markets as the Seven Network added $100 million.
Despite the resources boom, the Perth TV market shrank last year by around 1.7% while the WA regional market (which isn’t very big) rose by around 2.7%.
Sunraysia has already complained about a loss of ratings by the Network, the costs of some programming and losses on the AFL. But what of Southern Cross with its Adelaide station, NWS Nine?
Well, Adelaide was the worst performed market in the country: first half ad revenues fell by 0.025%, the second half collapsed to record a slump of 5.25%. SBC cut those jobs because of the first half slowdown; it had little fat to chop in the December half.
That was a loss of $6 million in revenue from the last half of 2005 to the last half of 2006.
And while radio revenues in Melbourne and Brisbane did well, the biggest market is Sydney and there they fell 5% to $216 million. That was in contrast to the slight recovery in TV revenues in that market.
Some analysts say Adelaide only contributes a small part of SBC’s earnings. Last half it would have been lucky to break even.
The same analysts ignored the worsening in the Adelaide ad market in the second half of the year.