News, current affairs, reality shows and live sport.
That’s what you can expect to dominate free-to-air TV as the networks battle for a dwindling advertising dollar.
Nine Entertainment on Thursday joined Seven in reporting a drop in TV advertising during 2014/15, and it expects growth of just one per cent in metropolitan markets in the current financial year, at best.
Coupled with Nine’s disappointing ratings in the past few months, mainly due to the failure of its Reno Rumble against Seven’s House Rules, the network’s profit excluding one-offs dropped three per cent to $140 million in 2014/15.
Advertisers are increasingly making short-term decisions on where to spend their media dollars, relying on daily ratings figures to make those decisions, Nine said.
Chief executive David Gyngell expects Seven to remain the ratings leader, due to its rights for the 2016 Olympic Games, though the recent success of Nine’s The Voice has him confident of an improvement in the company’s share of ad revenue.
He expects big advertisers will eventually return to free-to-air TV to take advantage of exclusive content made by the networks – reality shows and news and current affairs.
Drama is increasingly becoming the domain of streaming services like Netflix, and Nine and Fairfax Media’s jointly owned Stan, which offer programs when and where viewers want them, he said.
“I believe they will come back, especially the large advertisers who are trying to get out in front of their competitors who are nipping at their heels,” Mr Gyngell said.
“Because they are larger and they’ve got more money they will spend on television and buy exclusives and buy those things.
“Us having more locally-owned content is going to create more value and it is what is going to define us.
“There’s no better content in this place than news and current affairs. That’s what we will continue to put a lot of investment in.”
As well as Nine’s reality TV shows, which includes The Voice, The Block and Farmer Wants A Wife, will also prove a point of difference to new media, he said.
“You’re not going to make reality shows just for streaming services,” Mr Gyngell said.
A $792 million writedown on the value of Nine’s TV business sent Nine Entertainment to a $592 million annual loss, similar to how Seven’s near $2 billion TV writedowns pushed Seven West Media to a $1.9 billion annual loss.
Mr Gyngell admitted Nine’s recently secured $925 million deal to extend its NRL broadcast rights to 2022 came at a massive cost, though rugby league is seen as another cornerstone for Nine’s future.
“We don’t feel like geniuses buying those, we just buy it because you have to buy them, and you are in trouble if you don’t have them and it’s expensive when you do have them,” he said.
Nine shares were up five cents, or 3.45 per cent, at $1.50 at 1501 AEST.
SHRINKING AD MARKET AND WEAK RATINGS HIT NINE
* Net loss: $592m, down from $64m profit
* Profit excluding one-offs: down 2.9pct to $140.1m
* Revenue: up 2.6pct to $1.61b
* Final dividend: up 0.8 cents to five cents