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Seven CEO calls for end to TV licence fees

Following a nearly $1B loss, Seven again raises the issue of licence fees being dumped altogether.

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2015-02-19_0152Seven CEO Tim Worner has given an interview in which he calls on the Federal Government to drop licence fees altogether.

The comments follow the network’s nearly $1B loss, reported in half-yearly results yesterday.

Currently, Seven, Nine and TEN pay 4.5% of gross revenues in licence fees. In 2013 networks were given a 50% reduction in licence fees under a Labor government, without any conditions attached.

But there are new players entering the space online which pay no licence fees, including Seven’s own joint-venture with Foxtel, Presto TV.

“The facts are other countries like the UK pay almost nothing and in the US they have never paid fees at all,” he tells The Australian.

“The UK had theirs reduced at the time of the transition to digital and they have remained there due to the recognition of the changed operating and competitive ­environment.”

Networks have previously lobbied governments to remove licence fees, under successive governments.

Licence fees have traditionally been in play for the privilege of having broadcasting spectrum, complemented by requirements to meet local content quotas.

Last year Seven produced more Drama than any other Free to Air network, followed by TEN and the ABC. It also made the highest financial contribution from a single broadcaster in Drama.

But there have also been calls to attach further local content requirements to any removal of licence fees, particularly in the area of Children’s Television.

Despite yesterday’s $1B loss, Tim Worner was buoyant about the outlook for the television sector.

“This does not diminish our belief in the future of free-to-air television or our ability to maintain leadership, revenue share and cost control in the business,” he said.

22 Responses

  1. So Seven CEO Tim Worner would like zero licence fees?

    Well I would like more than three commercial networks but I doubt Tim and your peers at 9 & 10 would agree… The fact remains that commercial networks have a very nice arrangement where they control 1/3 of the total commercial market which is not the case overseas.

  3. @ Victor re ” the broadcast spectrum is a public resource” what rubbish! They don’t own it at all. If so they should pay for all TV and radio. Given that the networks broadcast News, sport, drama and documentaries 24/7 (not to mention the huge value of community service announcements and services) for free to the public they definately should not pay any licence fees. If there was no Free TV/Radio that would be virtually the end of civilization as we know it! Just look at the vital weather information being broadcast right now.

  4. This is a fabulous idea. Seeing he’s so keen on comparing the local market to overseas let’s also adopt the UK’s content laws. I look forward to a healthy quota of prime time shows (not news, sport or reality crap). These shows must also then be produced and made in the same location as each market’s transmission point. Perhaps then not legal to have it all in the Sydney-centric current setup.
    Where these guys just see a problem – local owners of these TV companies were happy with much smaller profits and their own local shows many years ago.
    This business is the victim of corporate short sightedness and unwillingness to think outside the square in a changing media environment. Managers abound with nothing more than a sales or “family” background. Worked fine in the 80’s. Unfortunately the ship has almost been scuttled – entirely by those who have been steering it over the…

  5. I reckon they should cancel the license fees, but set a local content (non reality/sport) requirement that equates to the same amount of money on top of their current local requirements.

    That would result in a massive boost to the industry, but would also force the networks into actually defending their own turf in the most substantial way with a huge investment in local content (not just increasing sports rights, as they have to do that)

    Such a reform would be a cultural and financially a very savvy move by any government. Furthermore, given the spend on production would end up being an even bigger amount once you account for 3rd party distributors, Screen Australia etc to fund scripted deficits, the payroll tax alone would likely surpass what they currently get directly from the networks – not to mention the flow on affect to the rest of the economy.

  6. I’d be in favour of a licence fee reduction as long as the funds were used to meet their drama and childrens quota obligations and not sent straight through to their shareholders. Nine are meeting 50% of their drama quota with NZ imported product and all three FTAs seem to have abandoned children’s live action drama which is a great shame.

  7. Seven didn’t make a loss. They reported revenue of $677m and EBIT of $182m.

    The loss is purely a write down of good will on the balance sheet because TV and newspapers are worth what they were before the internet. Most of their profit came from TV and they have already had a massive reduction in their TV licence to reflect the change in TV revenues.

    This is rent seeking pure and simple, trying to get the government to increase their profit.

  8. We can quibble over the amount of the fee but the networks have been allocated a part of the RF spectrum to use to run their businesses. This is valuable and could be used by the emergency services or to better accommodate the explosion in mobile and wi-fi technologies and shouldn’t be given away.

    The fact that the networks have had their heads in the sand for so long about the internet is no reason for the government (us taxpayers, really) to be giving them a bunch of cash. Will Worner be seeking to to have his electricity supplied for free next?

    I tell you what, I would vote to give them a 50% reduction on what they currently pay if they were forced to publish an accurate EPG 7 days in advance and f***ing stick to it.

  9. Hmmm don’t like paying for the licence? Then get out of television and find another industry to operate under. This loss has nothing to do with the licence fee, but how you operate your business and weather market forces.

  10. All sounds very familiar. Seven’s loss is mainly attributed to write downs and includes media outside TV such as magazines and the West Australian newspapers, bad investments that have been in decline for years. The commercial networks got their spectrum for nothing and then got their digital channels for nothing and got subsidised to convert to digital. They have the anti-siphoning rules, the 20% rebate of expenditure for Australian drama and documentary, Screen Australia subsidising expensive top end dramas, a 50% reduction in licence fees under the Labor government, cheap New Zealand drama getting Australian drama quota points. The list of protection has got bigger not smaller over the past decade but apparently this is not enough. Getting rid of licence fees is like getting rid of mining royalties. The broadcast spectrum is a public resource. It’s about the 7.30pm reality show and not much else now – everything after that is just filler and each network basically airs one show across an entire week.

  11. He’s having a laugh isn’t he? The airways are public, his right to use them come from the public. Imagine if a mobile phone company didn’t want to pay for spectrum. If he can’t make money with a high rating network he should resign from his job.

  12. Sure you can get rid of the licence fees under one condition, we get a regulator in that penalises any network who doesn’t stick to it’s advertised times. It’s time Australia wakes up and something be done about shows starting late. All networks are guilty of this all of them even foxtel. We need to make them pay.

  14. Just as well they canned TT, isnt it?

    I mean, “The Media Mogul who lost over a billion dollars – then wanted a free handout from the government!” is such an irresistable story it’s hard to see how they could ignore it…

      1. Yeah, but TT never let the truth stand in the way of a good story 😉

        FWIW, I don’t think it’s true that networks in the US don’t pay any ‘licence’ fees. It’s a historically different situation that’s more akin to the way things used to be here (separately-owned & licenced stations in a network), but the FCC charges each broadcaster in each market an annual ‘regulatory fee’. Last year it was US$44,650 (down from US$80-odd k in 2013) for each of the top-10 markets, so the likes of NBC/ABC/CBS are almost certainly paying over US$500,000 annually. And that’s on top of transmitter licencing, etc.

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