Gloomy forecasts for the Australian TV industry from investment analysts has been supported by a sharp slowdown in the growth of ad revenues in the first half of the year, especially in Sydney.
Figures from free TV Australia show that regional advertising growth outstripped metro markets, especially Sydney and Adelaide where revenue fell in the first half of 2008, compared to the figures for the same period of last year.
The 1.4% fall in Sydney is especially telling as it’s the biggest market in the country and means the economic slowdown is hurting the media in that market more than any other part of the country. Macquarie Radio Network revealed last Friday that radio ad revenues in the Sydney metro market had fallen 1.17% in the year to June in downgrading earnings by 15% to 20%.
The overall revenue for metro and regional markets rose by less than 1% to $1,752 billion, from $1.740 billion in the same period of 2007. (2007 first half growth had jumped 6.5% over the same period of 2006.)
The five metro markets (Sydney, Melbourne, Brisbane and Adelaide), added a whole $3 million in extra revenue in the half to $1.340 billion, from $1.337 billion. The regional market grew 2.45% to $412 million from $402 million in the first half of 2007, thanks to strong growth in regional Queensland (up 5.5%) and the Northern territory/Tasmania, up 4.1%.
The latest figures compare poorly with the growth in the second half of 2007 of 9.42%. That’s normally the best time of the year for TV networks, but it was further boosted by the election spending and the huge ad campaigns the then Howard Government ran in the lead up to the poll. TV Networks also received the bonus of an extra minute of advertising a night during the 33 day campaign.
And with no boost from an election and major advertisers cutting back, the second half of this year will be bad for the networks. Seven has the Olympics (but the costs to go with the revenue boost) and Ten and Nine will be hit by the lack of spending in the aftermath of the games and by the downturn in retailing in particular.
The latest figures show that the Seven Network remains number one, holding on to its share: it had a 39.13% share of revenue, compared 39.18% in the first half of 2007 (and 38.35% in the December half.
Seven had been tipped by some excitable commentators to suffer a sharper fall in revenue share because of ratings gains made by the Nine Network in the first half. Seven’s revenue share is still well above its commercial 36% ratings share.
Nine lost share: in the latest half it had 31.7% of metro revenue, compared to $32.7 in the same half of last year. Nine had a first half prime time ratings share of 35.6%.Nine’s first half 2008 revenue share was up from the 30.8% share in the December half.
Ten lifted its share to 29.08% from 28.10% last year. But that was lower than the 30.8% share Ten had in the December half of 2007. Ten last month warned of a 10% drop in 2008 earnings because of falling revenue and the impact of the Olympic Games.
The warning surprised the market, but it’s a bit easier to understand with these figures. Ten had a prime time first half ratings share of 28.4%.
Besides the drop in Sydney revenue (down $7.1 million), Adelaide saw a 0.33% drop to $104.2 million from $104.6 million. That’s bad news for Bruce Gordon’s Win Group which paid around $105 million for the Nine station in that market last year.
Perth was the best performing market, with revenue up 3.8% to $140.23 million (from $134 million in the first half of 2007). That in turn is good news for WIN and Mr Gordon, who paid $163 million for the Nine station in that market last year.
Growth in the Brisbane market was almost 2% to $227.1 million while Melbourne had a tiny 0.19% growth in revenue in the latest half to $367.87 million.
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