The recent announcement by the Nine Network to drop its affiliation with WIN in favor of a five-year deal with Southern Cross Austereo (SCA) raises more questions than it answers on Australian television.
Currently, WIN carries the Nine signal to regional areas in all states and territories except the Northern Territory. Southern Cross is in partnership with Network Ten and broadcasts in Tasmania, Darwin and Central Australia.
The deal will see SCA pay 50% of its advertising revenue to Nine in exchange for showing Nine’s programming in regional Queensland, southern New South Wales and regional Victoria.
This is far more than the 34% of SCA reported to Network Ten.
This is also an increase from the 39% that WIN paid when affiliated with Nine. According to media reports, Nine wanted to increase this figure to 55% during the recent negotiations with WIN, which resulted in a deadlock.
There was a last-minute six-month membership extension between WIN and Nine in December of last year, but this did not result in any further transactions. The two have been associated since the 1980s.
Tensions between the two organizations have also escalated this year. WIN has taken legal action against Nine in an attempt to prevent it from streaming live on the Internet in areas authorized by WIN.
In recent days, this case has been dismissed by a New South Wales Supreme Court. Judge Hammerschlag said:
I have concluded that the live broadcast is not broadcast within the meaning of the program supply contract and that Nine has no express or implied obligation not to do so
This decision to allow a TV broadcaster to broadcast its content live to all Australians arguably calls into question 20th century Australian media ownership laws, in particular the 75% reach of the population rule.
With the decline of free TV audiences, affiliate exchanges and video on demand services further reshaping the media landscape, there are many questions about the future of television in Australia.
Mergers on the horizon
The breakdown of WIN and Nine affiliations revolves around organizations that do not agree on revenue sharing. But there is another perspective: the potential of a merger between a regional and metropolitan broadcaster.
It could be a strategic decision by Nine to link up with the weaker of the two regional broadcasters.
If changes to media ownership laws are passed, thereby removing the 75% audience rule, this will open up merger opportunities for metropolitan and regional broadcasters. However, they have yet to recognize this as a definitive future option.
SCA reportedly fought for its profits, stating last year:
The 2015 results reflect a weaker television advertising market and a reduced but stabilized metropolitan radio market share.
Grant Blackley, managing director of Southern Cross Austereo, was asked about a possible merger in March this year. He stated:
At this time, we have no visibility into the intentions of the Seven, Nine, or Ten networks. But, you know, we’ll be openly looking to see how we can improve services for regional viewers.
After the affiliation was announced, Blackley said he believed it “will provide a substantial increase in audience and revenue opportunities, which will be of much greater benefit to the company and shareholders”.
While SCA and Nine reject the idea of a merger, when asked about merger discussions with SCA, Nine CEO Hugh Marks said, “We haven’t had any recent speaks of a merger.
If media ownership changes occur, Nine and SCA could “embark on an A $ 1.7 billion merger.” This would result in what is defined in the proposed media ownership laws as a “trigger event”, which would lift the required hours of “local content”.
Who broadcasts who
Starting July 1, regional viewers will see the Southern Cross TV brand replaced with the Nine brand, which is an interesting move in and of itself.
In areas served by Nine’s own regional broadcaster, NBN Television, SCA will “maintain its affiliation with Ten for programming”.
It is also believed that SCA will continue to broadcast Seven’s programming and will continue its affiliation with Seven Network in Tasmania, Darwin and Central / Remote Australia. WIN is also expected to continue broadcasting Nine content in Tasmania and the Western Australia region.
The changes in affiliation and the interconnection of metropolitan and regional broadcasters raise further questions for the future of regional broadcasters and what will be the future of regional television in Australia; especially local content.
The change of affiliation of Nine and SCA leaves both WIN and Ten without an affiliate partner. The obvious solution will be for two broadcasters to strike a deal, but that will see WIN now partnered with the third commercial TV broadcaster.
It is likely that Ten will launch to WIN his improvements in scores over the past 18 months, which is due to programs like The Bachelor, I’m a Celebrity, Get Me Out of Here, Masterchef and the Cricket Tournament. Big Bash League.
To be continued
While there is a clear argument for revising our media ownership laws, which are quite outdated and do not include any internet discussion, we need to be careful with the changes and resulting impact.
Regional areas will be the hardest hit by these changes in affiliation, and those that could result from changes in media ownership. The impact of these changes on local content, especially local news, is unclear.
The production of content is expensive and the increase in the percentage of revenue of metropolitan broadcasters on the regional only takes away funds that could be used for local programming.
Australia’s first regional television licenses were granted to those interested in the region. If a metropolitan broadcaster were to buy a regional broadcaster, it would lead to a change in the “local interest” of broadcasters and therefore in the way they approach “local content”.
It is the definition of “local content” that must be nested in the debate before a triggering event occurs. If this is not done, locals in regional areas will lose out in the merger of a metropolitan and regional broadcaster.