The effects of the international financial crisis have been slower to impact on the advertising industry in both Australia and New Zealand than in the US or the UK. However, the last quarter of 2008 saw newspaper and television advertising decline by 5 to 10% in both countries and the impact is even more dramatic in the first quarter of 2009.
New Zealand has been at the vanguard of Pay TV competition and yet slightly a protected species from the full effects of competition from the Internet.
Sky Network Television, a 43% Murdoch controlled company, has been one of the fastest growing Pay TV networks in the world. Sky has increased its penetration from 35% of homes five years ago to nearly 50% today. This compares with Foxtel in Australia with about 30% and BSkyB in the UK with 35% and cable a further 12%.
The television group most affected by the growth of Pay TV in New Zealand has been the state owned TVNZ, where the ratings share of its main channel, TVOne, has been reduced from nearly 40% 10 years ago to about 27% today. Similarly, its second channel, TV2, has fallen from a 27% share to less than a 20% share in the same period. The other commercial operators have roughly held their share with the CanWest owned TV3 having 20% and Prime a 5% share.
TVNZ under CEO Rick Ellis has been fighting back over the last couple of years to turn around the performance of TVOne and in particular the flagship One News at 6pm. TVNZ has also introduced two new digital Freeview channels, TVNZ 6 and TVNZ 7, and led the way in providing catch-up TV with online downloading of over 200,000 hours each month. A major purpose of these efforts has been to increases the perceived value of TVNZ to the public.
TVNZ send their 50 senior staff to a Business Leadership course at University of Auckland Business School, middle management on an in-house management development program, and run lunchtime seminars for their staff on money matters. This is far more than Australian television operators, who provide comparatively minimal management education.
In addressing the CEOs of the New Zealand advertising industry at a Television New Zealand senior management conference, some were not so concerned by the threat of online to the traditional advertising industry. Internet advertising at A$142 million in 2008 was only 8% of main media advertising compared to A$1.8 billion or 14% in Australia. In the UK, Internet advertising is expected to surpass television advertising this year. The kiwis have been a protected species in this regard.