The economy might be not in a recession, but it’s clear commercial TV is, with a sharp fall in 2008 second-half revenues, a fall that has hit the Nine and Ten networks especially hard.

The Seven Network lifted its share in a shrinking market to 41.38% from 39.13% in the June half, the highest share for the network on record.

But Nine saw its first-half share of 31.78% fall to 30.87%, while Ten was hit harder still, seeing its share fall from 29.09% in the six months to June, 2008, to 27.74%.

Figures from Free Tv Australia (Compiled by KPMG) show that TV advertising revenues across the country fell in a black hole in the December half, down a nasty 4.3% to $1.957 billion from the back half of 2008. That was after a first-half rise of 0.7% to $1.752 billion.

Metro markets took the brunt of the pain, experiencing a sharp 5.33% drop to $1.508 billion while regional markets saw a smaller, 1.31% fall to $449.62 million. Only regional Queensland grew revenues in the second half, up 0.2%.

The metro markets are where the majority of the ad dollars are spent on free-to-air TV and Sydney was hit with a fall of 5.79%, Melbourne was off 4.29%, Brisbane, a large 6%, Adelaide, 3.37% and Perth, the largest of all, down 6.5%.

Especially hurt will be super-regional, WIN based in Wollongong which expanded in 2007, paying around $250 million for the Nine stations in Perth and Adelaide. The losses there in the December half, and in regional NSW (off 2.5%) won’t be helpful.

The Nine Network claimed it was the big winner from the 2008 ratings battle and ended the year in first place in the key 25 to 54 age group, but the figures from Free TV Australia reveal that it failed to turn that performance in a solid ad performance.

TV ad revenues are likely to fall by a similar amount in the June half of this year if reported drops of up to 5% so far in January-February books are any guide. That will add to the pressures on all three to cut costs, and especially on Nine and Ten to lower their expectations about revenue for the full year.

They could end up spending more to get ratings that return less revenues. Seven will be in a similar position, but without the pressures of losing share and dollars and losing at the ratings game.

All three will be spending tens of millions of precious dollars to retain or grow ratings share in shrinking viewing and revenue markets. That is unsustainable.

Thanks to the impact of the Beijing Olympics (and the AFL Grand Final) Seven emerged with 41.38% share of metro ad revenues for the second half, after the 39.1% share in the first half of 2008. Seven won’t have either this year to boost its second half, so it will be under pressure in the back half of the year.

Seven had a gap of 10.51% point on Nine in the second half, while it was a share for the full 12 months of 40.3%, a lead of 9 share points on Nine.

It was the first time Seven’s share had topped the 40% mark and means its revenue share exceeds its ratings share in All People.

Seven’s December half share in 2008 was up on the 38.35% in the last six months of 2007. Nine’s share of 30.87% was up marginally from the December half, 2007 share of 30.81%, Ten’s was down at 27.74% from 30.84%.

Ten’s poor performance is likely to raise questions about the performance of its TV management and sales performance, while Nine’s fall will prick some of the hype it has been engaging in in the lead up to the new ratings year that starts the week after next.

Seeing Seven has already warned that its December half earnings will be off by around 50% and Ten has already reported a sharp slump in the November quarter, attention will switch to Nine’s performance, especially as it refinanced itself in early December and claimed to have received more money in the deal. James Packer was wise to sell and wise to not committed more money to Nine’s refinancing.

Peter Fray

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