The annual gong season of Oscars, Brit Awards and others have ended with Madonna falling off the stage and Michael Keaton jumping the gun with his winner’s acceptance speech. Nothing bizarre about all that really, but the self-aggrandisement of the television and film industry simply knows no bounds.
The highlight of Nine Entertainment’s half-yearly result was the $150 million share buy-back. Compared to Seven West Media’s $1.1 billion of write-downs, Nine’s news sounded quite appealing but the sector is languishing under leaking advertising revenue, increasing competition and the usual hubris of market share.
Nine’s television unit reported operating earnings (EBITDA) of $131.8 million for the half-year period which was an 11.7% decline on the same period last year. The company noted the 3% market decline in metro free-to-air advertising but as usual the market share gain argument was put forward as reason for optimism.
Seven’s television unit boasted similar success on the advertising revenue share front but blurred out the small decline in actual advertising revenue.
In the meantime, poor old Southern Cross Austereo Group watched its television revenue fall 5.9% and its total revenue slip 7.3% on the back of the drama in its radio businesses.
Network television remains a substantial industry with around $3.5 billion of advertising revenue to scrap over, but its share of the pie continues to migrate towards online platforms echoing the demise of the print industry.
Finding alternative avenues of growth such as event management, digital platforms, multi-channelling and now, subscription video on demand has so far met with little traction and much additional cost.
Nine’s partnership with Fairfax Media in its svod venture called Stan will get the red carpet treatment from the marketing department but whether it can contribute meaningfully to the operating profit of the group will take plenty of time.
It’s a similar story for Seven’s partnership with Foxtel’s Presto business.
The mere fact that everyone has teamed up in what is normally a ‘them and us’ dog fight says plenty about how nervous executives must be about cooking a large amount of money on a risky venture.
The elephant in the room of course is Netflix and it will be a bloody battle once all participants are throwing the promotions and freebies at customers in the hope of covering their not insubstantial costs.
Network Ten reports its half-year result next month but its highlight reel will be embarrassingly brief.
Investors should save themselves the angst and avoid all four stocks – Seven West Media, Nine Entertainment, Southern Cross Austereo and Network Ten.