Private equity suits are on the verge of controlling Australian commercial TV and they will want their pound of flesh for their investors. The only way that can happen is for revenue to rise faster than costs.
Driving higher ad revenues takes time and private equity investors are not that patient – they will want to go the other route: cutting costs as quickly and as deeply as possible to boost cash flow and profit margins.
Seven is in a solid position: ratings are strong, revenues are strong and profits are strong, but its private equity partner, KKR, has plans for what will happen if that situation changes and cost cuts are at the top of the list.
One area where the suits will get those cuts is through pay cuts or sackings for some high profile talent. Nine has already seen that with the likes of 60 Minutes executive producer John Westacott’s pay being cut in half.
But he’s behind the camera, who are the on camera people at the commercial networks being paid zillions for varying return to the owners?
For example, is Sam Newman of Nine’s AFL Footy Show really worth the $800K a year he is paid to cavort like a fool?
In contrast, Seven’s main Sydney news reader, Ian Ross, is paid around a million a year, give or take a few grand or so. Is he worth that to the suits at KKR?
Well if you look at the performance of Seven News in the past three years in Sydney (and cheaper readers in other states) the answer would be yes.
In the interests of cutting costs at the Networks, because the suits are shy and retiring and don’t want publicity, here’s a quick guide to the available fat.
At the top, Eddie McGuire, $4.7 million at last report but has a new contract for five years. Could he really be worth $20 million-plus at Nine when he wants to be a producer and should be risking all, as other independent or semi-independent producers do?
Ian Ross: Seven; around a million dollar a year, but probably worth it.
Sam Newman: a reputed $800,000. Costing saving is spelled N-e-w-m-a-n!
Ray Martin: Still at Nine and still battling for a quid, even though the salary of $2.5 million three years ago has been reduced. Doesn’t really need to work seeing he owns a multi-million dollar share portfolio. Thanks Rene!
Mike Munro, also at Nine on lowered earnings. A newsreader and occasional 60 Minutes reporter. Doesn’t like to travel though.
The 60 Minutes reporting staff: among the highest paid faces in the country with salaries north of $250,000 a year but no one at the $600,000 that the late Richard Carleton was earning.
Tracy Grimshaw on Nine’s ACA : around $350,000 but do the ratings justify it?
Anna Coren on Today Tonight : A bargain at an estimated $250,000 to $300,000, given the ratings gap on ACA , especially over the past two months.
Mark Ferguson: Nine’s loyal Sydney 6pm newsreader: around $350k a year perhaps. Good value given the faltering product he fronts Monday to Friday.
Bert Newton: around $400K.
Drama costs between $400,000 to $700,000 an hour (and more for programs like Nine’s Sea Patrol which is coming). Foxtel does it cheaper but then it doesn’t get the revenue from its dramas and comedies that Nine, Ten or Seven would from a high rating program like All Saints on Seven.
Finally, will Sky News be the default broadcaster for Nine as perhaps the biggest cost saving?
And, will CVC Asia axe programs like Today, Sunday, A Current Affair, to lower the overall cost of running the network?
And if Ticketek and the ACER Arena in Sydney are worth $210 million to CVC Asia and PBL Media, what will the conversion of the entire Nine Network to full digital operation, be worth to the suits? That is the biggest questioning confronting CVC Asia’s ownership of Nine.