How do you put lipstick on a pig? Give it to a lobbying/industry group and they will apply a nice shade of red and turn an ugly story into the glossiest of fairy tales. Take the half-year revenue report for Australian broadcast TV from Think TV, issued yesterday.
It claimed that:
The Total TV ad revenue market increased by 1.8% to $1.98 billion for the six months to June 30, 2018, bringing total financial year revenue for the sector to $4.15 billion. This result was driven by a particularly strong performance in the free-to-air sector, which was up 3.81% in the June half, to report revenues of $1.36 billion and $2.86 billion, up 2.53 % for the full financial year.
But the release later noted that, “Over the full financial year, the Total TV ad revenue market was $4.16 billion, an increase of 0.5% compared with the previous corresponding period,” not explaining the $10 million difference between the two annual figures in the media release. But whatever the figure, the release glossed over what appears to be rather some nasty news for the broadcast sector.
The release said the $4.15/16 billion figure includes “Broadcaster Video on Demand (BVOD) platforms 7Plus, 9Now, Tenplay and Foxtel Now has translated into record digital growth, with BVOD revenues up 40.5% to $50 million for the six months to June 30, 2018. The success highlights consumers’ growing demand for streaming TV content, which lifted BVOD revenues for the financial year to $92.8 million, up 32.38% year-on-year.”
But that doesn’t include Stan, half-owned by Fairfax and Nine, the second biggest streaming video operator in the country and the largest owned by Australians. Stan’s inclusion would give a more complete figure.
But it’s clear that without that 32.38% growth in BVOD ($92.8 million) for the year to June, then total revenue would have been lower than 2016-17 — around $4.06 billion. The total also includes ad dollars spent on Foxtel (Fox Sports and the myriad other channels), which the TV industry guesstimates is around $600 million or so. Strip that contribution out and you get around $3.5 billion for the free-to-air broadcasters — the peak year was 2010-11 when ad revenues for Nine, ten and Seven totalled $3.99 billion, according to Free TV Australia.
Think TV release also said that “this result was driven by a particularly strong performance in the free-to-air sector, which was up 3.81% in the June half, to report revenues of $1.36 billion and $2.86 billion, up 2.53% for the full financial year”. If those are comparable figures with the Free TV data, then there has been a dramatic slide in revenues.
The most recent figures from Free TV Australia are for the 2015-16 financial year and give a total for the year of $3.71 billion in revenue (made up of July-December, 2015 revenue of $1.972 billion and January-June 2016 revenue of $1.738 billion). If the $2.86 billion figure for 2017-18 is strictly comparable with the Free TV data, then the free-to-air TV industry has seen 23% slide in revenues in two years, which is a big story, and the first time we have seen the rumoured fall quantified. No wonder Ten went broke and Seven West Media shares are under pressure. A fall of that size would also call into question the easy assumption that a stronger Nine Entertainment is taking over Fairfax Media. Just on those figures Nine and Fairfax are as crippled as each other and it is a merger of the ailing and infirm.