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Australian TV sector faces ‘uncertain future’

The CEO of Ten Network has warned the television sector faces ‘a very uncertain future’ if reductions in Australia’s high licence fees are not forthcoming.

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Australian TV sector faces ‘uncertain future’

Rebecca Hawkes
The CEO of Ten Network has warned the television sector faces ‘a very uncertain future’ if reductions in Australia’s high licence fees are not forthcoming.

Network Ten LogoPaul Anderson’s caution came as Ten issued a profit warning, anticipating its earnings before interest, tax, depreciation and amortisation (EBITDA) will fall short of its December 2016 AGM forecast by between A$10 million and A$15 million. A weak advertising market and increased content and other costs were blamed for the shortfall. Ten’s TV revenue increased 1.9% in the first quarter of FY2017, and the broadcaster expects revenue is to increase by about 1.2% for the half year to 28 February 2017.

However, Anderson warned that a continuing decline in TV advertising markets, without any relief in TV licence fees, will result in Ten Network posting an EBITDA loss for the full year of between $20 million and $30 million. “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,” he 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.”

Anderson called for the playing field to be levelled between domestic free-to-air broadcasters and global Internet companies such as Netflix and Amazon Prime Video, which take advertising revenues out of Australia but are exempt from local media regulation, content obligations and TV licence fees.

“We are calling for urgent action from the Government and the Parliament to ensure a future for the high quality, free television service that Australians highly value and rely on,” he added.

Ten’s warning came shortly after rival free-to-air commercial broadcaster Seven announced its television EBITDA was down 22.5% to A$153.2 million in the 2016 financial year (FY). Impairment charges of A$83.3 million reduced the interim profit to $12.4 million - 91% less than the interim profit in the first half of FY16.

Bucking a domestic trend, Seven’s TV advertising revenue increased by 4.6% to A$648.7 million. Its programme sales also increased, 16.7% to A$50.2 million, with total TV revenue climbing 5.4% year-on-year to A$698.9 million. However, the cost of covering the Rio Olympics and third-party productions increased Seven’s costs by $86.5 million.