TEN boss: ‘We had the wrong shows, wrong strategy’

TEN CEO Hamish McLennan says shifting the network’s focus from 18-49 to 25-54 will take time and he has inherited some programming “which will take time to work out of the system.”

He also laments that the network that first had Big Brother and X Factor let them go to other networks, which are now punishing them in the ratings but signals that more Sport, Reality Television and News, under Peter Meakin, are coming.

However TEN’s AGM is also coming next month.

McLennan, who began at TEN in March,  has given an interview to Business Spectator‘s Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz touching upon programming, revenue and strategy:

AK: Explain to us what was wrong with the strategy – you said the strategy previously was wrong. What was wrong with it? Explain that.

HM: Look, we historically have gone for a 16 to 39-year-old demographic. It was adjusted to 18 to 49-year-olds. But the simple fact was that the orientation of the business was focussed around the youth market and statistically if you just look at the numbers, the biggest body of viewers – and the most profitable body of viewers – are 25 to 54-year-olds. But we were chasing a market that was just declining in overall numbers and we were producing shows like Being Lara Bingle, I Will Survive and The Shire that were alienating our older consumers, and those kids don’t watch free-to-air television the way perhaps we did when we were young. There’s not a lot of money to actually capture them anymore – they’re ripping stuff off the net and watching YouTube. They just don’t consume free-to-air television the way they used to. We were just chasing the wrong demographic.

Interestingly, when you look at some of the shows that had worked very well for us in the past – like Masterchef – the viewers were falling well into the 25 to 54-year-old demographic and picking up a wider pool of people. We were chasing the wrong demographic and we had the wrong shows – hence the wrong strategy. Now putting the focus back on programming like live sport, I can’t underestimate the value of things like the cricket, which we’ve secured at the right sort of price as we did with the Winter Olympics. It’s live programming that doesn’t get PVR’d (recorded on personal video recorders).

At its core Ten still has very good roots. Its DNA is very, very strong. I’m impressed by the quality of people, we’ve just got to reorientate the ship around a more profitable market and that market is 25 to 54-year-olds. And let’s not forget too that we also launched our digital channel, Channel 11, which was also cannibalising the mother ship, which was Ten. So we had strategically two channels that were fighting against each other with even more fierce competition and it wasn’t working for us.

Stephen Bartholomeusz: Hamish, you’ve made quite a big investment. You referred to the Big Bash, so there’s a big investment in sport – Big Bash, Commonwealth Games, Winter Olympics and The Breakfast Show. How big a gamble is that? I mean, if it doesn’t pan out in the next 12 months, where does it leave you?

HM: You have to back up your strategy with programming. I would just highlight that when you look at programs like the Commonwealth Games, that was a deal that was done four years ago and comes at a very, very high cost – much higher than what the Winter Olympics will cost us. The simple answer is that you can’t sit on your hands and do nothing. We’ve inherited some programming which will take time to work out of the system and I think that anyone who has a very clear view of our internal financials understands there are some contracts that we just need to work out.

We’ve got some formats that have been around for many years. A lot of them are good franchises, but we just need to start making better choices around what works. I think what pains me is … this is the network that invented Big Brother, had X Factor in its first year and launched Australian Idol and I think we let those franchises go and we were too quick to dismiss them and then move on to other things. So it’s going to be a return to shows or brands that will work for us. Reality-style programing does work very well on this network, we just need more time to do more of it and get focussed on what works.

We did an analysis last week where if you look at the top 60 programs in the country, 75 per cent of them have been around for more than a few years. My point being, that once you get a franchise you’ve got to work damned hard to make sure that it works and you’ve got to be focussed on making it fresh and new. I think that we’ve been too quick to walk away from what’s working. Some of those franchises, like reality television, you can embed advertising more easily and there are great client opportunities to do integration, and those things will all drive a more profitable outcome for the network. And again, if you look at what we’ve done with Studio 10 and Wake Up, they’re formats that we own.

So it’s very early days. It took a couple of years for Sunrise and Today to really drive great growth, so you’ve got to get new audiences acquainted with your network. We own the IP on those shows. They’re a great opportunity for us to then cross-promote throughout the day through to the evening schedule, and that will work for us. And I think when I anecdotally look at those shows, whilst it’s very early days, they’re quality programs that I’m proud of and it’ll just take time to build.

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