'Urgent changes needed' - Ten CEO on TV's very uncertain future

Pippa Chambers
By Pippa Chambers | 17 February 2017
Paul Anderson

Ten CEO Paul Anderson says the TV sector faces 'a very uncertain future' if urgent reductions in licence fees are not forthcoming. Anderson was speaking as Ten issued a profit warning.  

The Ten Network, which says its earnings before interest, tax, depreciation and amortisation (EBITDA) are anticipated to fall short of its December 2016 AGM prediction by up to $15 million, yesterday advised that although the advertising market remained extremely short in terms of forward bookings, its TV revenue had increased 1.9% in the first quarter of the 2017 financial year.

It says its revenue is expected to increase by approximately 1.2% for the half year to 28 February 2017.

Ten's profit warning follows Seven West Media announcing its 90% plummet in profits.

“As a result of the weak advertising market and increased content and other costs, Ten’s television EBITDA for the half year are expected to be $10 million to $15 million lower than the $10.1 million EBITDA profit reported for the previous corresponding period, resulting in an EBITDA loss of up to $5 million,” the Ten statement said.

Anderson said that a continuing decline in television advertising markets, absent any relief in television licence fees, will result in an EBITDA loss for the full year of between $20 million and $30 million.

Globally dominant internet companies must pay

Anderson used the address to market to stress that it is time for the government to 'face the reality that the world has changed', and argued that Australian media companies are competing directly for viewers and advertisers against globally dominant internet companies that are taking a growing share of advertising dollars out of the country.

He said as these companies are exempt from local media regulation or content obligations they don’t pay television licence fees,which is why it's calling for urgent action from the government and the Parliament to ensure a future for free television.

“This industry is obviously under severe duress and yet commercial free-to-air television broadcasters continue to be penalised by the world’s most expensive broadcast licence fees,
Anderson said.

“Without the investment of the commercial free-to-air broadcasters, local production will dry up, jobs will be lost and local news will be a thing of the past. As we have been saying for years now, the current regulatory framework is unsustainable.

“Without an urgent reduction in licence fees to the levels paid overseas, and without reform of Australia’s archaic media laws, this sector faces a very uncertain future.”

Framework is unsustainable

As previously advised, Anderson stressed that a rigorous cost reduction project is underway at Ten and a further update will be provided as part of the half-year results presentation. An impairment review, including the value of television licences, will be undertaken as part of the half-year accounting process.

Ten says it has continued to increase its market share in a declining advertising market, “driven by the strategy of investing in prime time content, and the innovative and market-leading arrangement with Multi Channel Network (MCN)”.

Earlier this week MCN begun offering advertisers dynamic trading across Network Ten programming. Ten moved to MCN's Landmark system last May and trialled dynamic trading of Network Ten channels late last year.

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