It’s not just Ten, Seven and PBL (through its half interest in Nine through PBL Media) that investors should be aware of in the wake of the release of the 2006 ad revenue figures for the Australian TV market.
Regional TV stations outperformed their big city rivals in the December half and in 2006 as a whole, despite the drought.
Total TV ad revenues in 2006 were $3.5 billion, which is about lineball with 2005, thanks to better than expected figures from regional TV markets where a number of listed companies share interests.
Revenues in the five major metro markets (Sydney, Melbourne, Brisbane, Adelaide and Perth) were off slightly, thanks to a better than expected second half which reduced the damage of the poor first half.
They totaled $1.872 billion for the December half, down by just 0.29 per cent, compared to the near one per cent drop in the first half to $1.461 billion.
Regional revenues rose around 3 per cent to well over $700 million.
The Seven Network, which has lifted its earnings guidance already to a profit rise up to 40 per cent, confirmed it had done well.
Second half revenues were sharply higher than in the same half of 2005. Seven had gross revenues from the five metro markets of around $584 million, $100 million more than in the same period of 2005.
That’s an increase of 20 per cent
Ten, which suffered a first half drop in revenues and share last year, saw a second half rebound, thanks to Big Brother and especially Australian Idol and Thank God You’re Here.
Ten lifted its share back to the 30 per cent mark from 27.6 per cent in the first half and almost as good as the 30.87 per cent in the second half of 2005.
Second half ad revenues hit $443 million, still under the $455 million of the last half of 2005 but a big improvement from the loss-making months in early 2006 (especially March).
The better performance will make it easier for Ten’s parent, Canwest, to interest buyers through the sale process now under way.
Nine’s performance was the worst of the three networks and you’d have to say that on this performance and prospects for the next couple of years PBL made a smart deal selling half to a private equity company.
Nine’s revenues fell sharply, as did its share. The share in the second half of 33.8 per cent was down on the 36.58 per cent of the first half of 2006 and 36.25 per cent in the back half of 2005.
In revenue terms, Nine lost $40 million in the last half of 2006 compared to the same period in 2005. In the back half of 2006 revenues totalled just under $494 million on a five major market basis (PBL owns stations in Sydney, Melbourne and Brisbane. (Perth is owned by Sunraysia and Adelaide by Southern Cross Broadcasting.)
The latter two markets are metro markets owned by regional operators. Sunraysia just has Perth (with the unlisted WIN as a major but locked out shareholder). PBL is said to be stalking STW but at a price cheaper than the $160 million Sunraysia is said to want.
NWS-9 in Adelaide is owned by Southern Cross Broadcasting which is also a major radio and regional TV operator (for the Ten Network)
Over the full year, Seven had 36.1 per cent of the metropolitan market, or $984 million, beating Nine’s 35.1 per cent or $955 million, and Ten on 28.8 per cent ($784 million).
And a final point: Nine’s revenues were boosted by around $60 million for the Commonwealth Games and $60 million for the Ashes cricket tests and One Day Internationals. Then there was the boost from the AFL which won’t be there this year (nor will the costs).
Nine’s outlook this is isn’t pretty.
Regional Australia performed far better than the larger metro markets in 2006 for the country’s TV Networks.
Ad revenues rose in the regional markets by3.1 per cent to $782 million, led by Queensland, Western Australia and Victoria while the major metro markets all contracted.
(Adelaide was the worst metro market with the 5.2 per cent drop while Sydney was the best performed with a fall of less than one third of one per cent.)
But regional markets rose 2.2 per cent after a four per cent rise in the first half of 2007. So despite the drought, things are looking better for broadcast media in the bush.
For Prime TV and NBN, both listed or part of listed companies, the results will be gratifying as they tote up the figures ahead of their interim results next month.
Seven Network will be happy: not only did it lift its metro share and revenues, its Queensland subsidiary, Seven Queensland, will share in a market which saw five per cent growth in 2006.
For the listed Sunraysia TV, which operates the Perth affiliate of the Nine Network, STW Nine, the performance of that market makes it easy to understand the previously issued warning of a loss for the December half.
Perth’s TV ad market contracted by around 1.7 per cent over the year with the rate of contraction smaller in the second half than in the first.
But regional WA boomed, with ad revenues up by more than 2.5 per cent over the year thanks to the resources boom. Sunraysia would have missed much of that with WIN scoring a solid share (it’s unlisted).
As reported above Sunraysia’s major shareholder is said to have the station on the market and is talking to PBL Media.
Adelaide is like Perth, a metro market with regional characteristics and certainly not performance.
Not only was Adelaide the worst performing metro market but it was the worst performing of all the broadcast TV markets in the back half of 2006 (and 2006 as a whole).
It’s why the shares in Southern Cross Broadcasting should be cheaper than they are.
Its shares are still trading at high levels simply because Macquarie Media’s raid last year which netted a stake of 14.9 per cent at $16.50 a share.
The shares were around $15.80 yesterday