License to kill networks

The value of commercial TV licences has been slashed by nearly $2 billion since 2003-04 as network audiences defect to the internet and pay-TV, according to an analysis by the Australian Communications and Media Authority.

Annual licence fees are calculated at 9 per cent of a broadcaster’s gross revenue.

The devaluation began in 2003-04, with a sharp fall in 2005-06 revenues leaving average licences worth less than a decade ago and approaching the levels of the 1980s.

The average value of a capital city licence in 2005-06 was about $120 million, down from about $230 million in 2003-04.

For a non-capital city licence it was about $50 million, down from about $90 million two years earlier. PBL Media’s Nine Network was responsible for the largest licence devaluations, although TEN had also devalued its licences in 2005-06.

“Historically, a commercial television broadcasting licence gave its owner unprecedented access to the Australian public and the right to sell that access to advertisers,” the report said.

“Since 2000, however, alternatives to TV, including the internet, subscription television, DVDs and games, have gained in popularity, attracting both new audience and advertisers.”

The report also said Nine had been the most profitable network between 1979 and 2006 but the relative positions of the networks were changing, with Seven and TEN now outpacing it in annual revenue growth. Expenditure comparisons also suggested Nine had significantly higher overheads than Seven but that the two networks spent similar amounts on programming.

Source: The Australian