Talks in Europe on the future of Neighbours, the legendary Australian soap opera, could very well decide if the struggling Ten Network has any future. The talks do not involve Ten — it is a bystander to these discussions between two of the biggest players in global TV, which could determine if Neighbours continues to be shown on UK TV. If it is dumped, Ten will be up for millions of dollars more in higher costs to retain the soap on air, or replace it with new programming.

Neighbours is currently showing on Channel 5 in Britain, which is now owned by US company Viacom. Talks between Channel 5 and FremantleMedia Group, the producers of Neighbours, have hit a stalemate over cost. Viacom is objecting to the licence fee Channel 5 is paying Fremantle. Neighbours used to be produced by Ten and Grundy, but Ten sold its half interest to Grundy last time the network went broke in the late ’80s. Grundy was sold to Pearson of the UK, which then sold off its TV interests to FremantleMedia Group. Fremantle is now owned by RTL which is Europe’s largest TV production group. RTL in turn is owned by Bertlesmann, the giant German publisher.

Viacom/ Channel 5 have been pressuring Fremantle for a cut in the Neighbours licence fees, and if that happens, or if Channel 5 drops Neighbours, Fremantle could very well ask Ten to pay more to cover the shortfall in the production costs. 

The Neighbours talks outcome has the potential to add enormous financial pressure to Ten’s already strained accounts and complicate the Ten management plan to turn around the country’s wobbling third commercial TV network. That plan involves cost cuts, lower taxes, higher revenues, a $250 million loan from some generous soul or bankers supported by new guarantees from major shareholders, and a lot of hope and crossed fingers.

Fox and CBS production deals are costing Ten an estimated $100 million a year, and the network wants those agreements dropped and replaced with deals based on actual program use, not the slate of shows the network has to take each year and pay for regardless of performance. It could halve the cost, especially if the Murdochs play ball (Lachlan Murdoch, remember, is not only a shareholder in Ten with just over 8%, but he is co-executive chair of 21st Century Fox with dad Rupert, while brother James is CEO). Fox owns 50% of another major production house — Endemol Shine — which is perhaps the most important of all suppliers to ten, controlling the Masterchef franchise, for example.

But it is those talks in London over Neighours’ future on Channel 5 that could turn out to be far more important in having a big bearing on Ten’s ability to survive. Those talks hit an impasse in March, and there’s no report since of any progress. Neighbours is one of Ten’s Australian content mainstays. It is broadcast Monday to Friday on Ten’s digital channel, 11, at 6.30pm. It has been on Ten since the mid-1980s after starting on Seven in 1985 and then being canned. It gave the world Kylie Minogue. That 2.5 hours a week is important because it meets just over half Ten’s Australian drama content requirements set by ACMA, the media regulator.

 

Get more Crikey, for less

It’s more than a newsletter. It’s where readers expect more – fearless journalism from a truly independent perspective. We don’t pander to anyone’s party biases. We question everything, explore the uncomfortable and dig deeper.

Join us this week for 50% off a year of Crikey.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
50% off