The man who directly hands more than $1 billion each year in TV advertising to broadcasters is calling 2015-16 the year the “model breaks” for free-to-air networks.
It’s a rude call for commercial TV operators from the biggest buyer of TV airtime in the country – GroupM’s chief investment officer Danny Bass. However, the Seven Network fired back warnings of “significant ramifications” for those who pulled large budgets out of broadcast TV in the next 12 months.
There is a likely element of brinkmanship from Mr Bass on his TV comments as he heads into GroupM’s annual TV rate deals for the 2015-16 fiscal year with broadcasters. But he is resolute that a combination of spluttering TV ratings for the Seven and Nine Networks so far this year – their primary channels are off more than 15 per cent – the rising cost of Australian content against declining TV advertising yields and the broader choice of screens and channels in which to place TV-style ads will put unprecedented pressure on broadcasters in the coming year.
“You’ve never had the set of circumstances that we have now,” Mr Bass told The Australian Financial Review. “We’ve seen enormous audience fragmentation. The first half of the year indicates that TV audiences are going to be down at levels no-one anticipated. You have the networks launching streaming services and you’ve got YouTube continuing to move into the TV space. So you’re looking at potentially significant [TV rate] inflation. We’re going into a negotiation period in an environment that we’ve never been in before.