Feb 23, 2011

The growing cost of the gift to TV networks

The government's gift last year to the free-to-air TV networks is costing us tens of millions more than forecast.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

The advertising rebound that is driving big revenue growth and a new round of media deals is also likely to mean the government’s rebate of licence fees to the free-to-air TV cartel will cost taxpayers tens of millions of dollars more than estimated — and will have to be made up for in the coming Budget.

This week, Kerry Stokes’s Seven Group, currently aiming to merge with another arm of Stokes’s media and construction empire, newspaper and radio group WAN, predicted an earnings increase of 20% for 2010-11, driven mainly by television advertising. Last week regional broadcaster Prime unveiled a return to profitability on the back of a 10% increase in sales in the first half of 2010-11. Southern Cross, which operates across regional radio and television and is looking to acquire Austereo, reported a rise of 5.9% in revenue.

Free Trial

Proudly annoying those in power since 2000.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

10 thoughts on “The growing cost of the gift to TV networks

  1. Astro

    Bernard, Its a clandestine Labor gift to the media moguls in return for favourable coverage.

    Smacks of Swan Smirk

  2. dawsondog

    They could not control the pinks batts, they could not control the BER, they can not control the TV giveaway. Why would we expect they will be able to do any better with the national broadband or the flood relief.

    Makes one nostalgic for Gough Whitlam and Dr Cairns.

  3. Daniel

    “Bernard, Its a clandestine Labor gift to the media moguls in return for favourable coverage.”


  4. freecountry

    Spectrum licenses are analogous to land in tax-base terms. Are the license fees adjusted politically from year to year, or are they subject to a fixed formula based on last year’s revenue? The same question for local content rebates–are they decided on the golf course or on a spreadsheet? It would seem more efficient to tax licenses like land (basing a fixed formula on past empirical valuation rather than forecasts, which means the calculation will lag the cyclical effects of GFCs and booms) and to subsidize local content at a pro rata level. That would have the advantage of high transparency and lower risk of handshake understandings between ministers and tycoons on the golf course.

  5. Scott

    Just out of curiousity, doesn’t an increase in revenue by the TV stations also mean that the original licence fee is higher as well? At the end of the day, the government is giving back a fixed percentage of revenue. In 2010, the rebate is 16.5% of the licence fee. The licence fee is roughly calculated as 9% of revenue from TV stations . Sure, with the increase in ad revenues, this rebate may have increased, but only at the same rate as the original licence fee. So while the government might have to give more back, it is also gaining more from licence fees. The effect on the budget will be neutral.

  6. freecountry

    And paying in advance but calculating from last year’s revenue means the ups and downs of the GFC or whatever just have a time lag effect, and the taxpayer’s not really out of pocket, yeah?

  7. davirob

    My subscription runs out today an I want to thank the likes of the ubiquitous freecountry and other people with bugger else to do but clutter up this joint for my choice to take a break.You guys might not give a toss but going by the please resubscribe e-mails from crikey they do.Cheers babies.

  8. Scott

    It’s not the likes of Freecountry that is stuffing up this website, it is articles like this one that are pretty poor. The finance and economics knowledge on crikey used to be good (which is why I subscribed in the first place) but now is to the south of ordinary.

  9. Woody

    Cost us? How much did it cost us to change over to digital TV? They sung the praises of High Definition and interactive television?

    What happened? We paid thousands replacing TV’s, VCRs etc for the luxury of being able to watch “I Dream Of Jeannie” and “Rockford Files”

    HDTV has been a miserable failure in this country. And these people are now singing the praises of the NBN?

    Gee, I wonder if that’ll deliver on the promises being made?

  10. Woody

    sorry about the grammar there…off work and on painkillers!

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details