A Sydney court case hearing a challenge to US US network, CBS buying control of Ten has prevented the deal happening, but in the US life goes on and CBS has revealed what is at its core a solid third quarter set of figures which in its composition underline the differences between the health of the Australian TV sector and that in the US.
Ten’s collapse and the slow slide of market leader, Seven West Media and its Seven Network tells us the outlook ain’t hot, and it isn’t.
But at least Seven is now starting to build areas of revenue and profit growth outside of its broadcast TV operations – such as its production business here and offshore which had revenues of $90 million plus in the year to June and is forecast to top $100 million this year.
Seven is also about to launch its streaming video operation 7plus (imitating CBS’s All Access business).
But the CBS 3rd quarter figures show that it continues to slash its reliance on ad revenues and rely more on more regular income like fees and other income from pay for view on its cable businesses, on retransmission fees and other charges – some of which are now available in Australia for the free to air industry, mainly because Foxtel refuses to pay Seven, Nine, Ten, SBS and SBC retransmission fees, even though they make up between 40% and ver 50% of viewing in cable TV homes most nights. Labor and Coalition Federal Governments have refused to go near the idea .
CBS said revenue rose 3% to $US3.17 billion which was less than market forecasts of $US3.26 billion. Advertising revenue dropped 5% to $1.11 billion from the third quarter of 2016, due to lower spending on political ads and one fewer National Football League (NFL) game. Content licensing and distribution revenue fell 22% to $US860 million, mostly due to the timing of domestic TV licensing sales (more expected this quarter). But affiliate and subscription fees jumped 52% to $US1.15 billion, boosted by the Floyd Mayweather-Conor McGregor pay-per-view boxing match on Showtime and growth in CBS’s streaming video services, as well as higher retransmission fees from cable networks.
The shares fell 3% in trading and another 1.1% after hours. They are down more than 15% so far this year while the S&P 500 is up 14.7%.
The NFL is key to the fortunes of Fox, NBC and CBS with their weekly broadcasts, CBS is currently broadcasting a game on Thursday night and a couple on Sundays. NFL ratings are down across networks this season (for the second season in a row). Some executives reckon it is the Thursday night game which is not well supported by viewers, but others point to the rising competition from streaming video from online rivals including Netflix, Amazon, Hulu and YouTube. That’s why CBS All Access is vital to the network’s future. CBS now streams NFL games on its streaming service. Amazon has been streaming the Thursday night games this season.
Through week seven (ending October 23) of the current season, NFL ratings are down 5% from a year ago, while primetime broadcast viewing is down 8%, according to Nielsen. A year ago NFL games were hit by the intense 2016 Presidential and other elections and were down double digit some weeks and 10% to 12% overall. This year there’s nothing like that to blame.
