As James Packer finally left the building at Channel Nine this week, his rivals at the Ten network revealed a new channel specialising in the very field Nine once dominated — sport.
Packer's departure from the board of Nine's majority owner, PBL Media, was the final severing of ties with the television station his grandfather, Sir Frank, founded and his father, Kerry, forged into the number one network in the predominant medium of the 1980s and 1990s.
But if Packer is closing the door on past media greatness, the Ten network is trying to gain a foothold in the new television landscape. From January 1 free-to-air TV networks will be able to broadcast a new standard definition station in addition to their existing offering. This intersection of past and future highlights the uncertainty swirling around the media in general and television in particular.
James Packer's decision underscores his steady withdrawal from the industry with which his family has been associated for the past four generations, beginning with his journalist great-grandfather, Robert Clyde Packer. The only media assets he retains in his company, Consolidated Media Holdings, are a 25% stake in the subscription television network, Foxtel, a 50% stake in production company Premier Media and a 27.5% holding in the online jobs advertising site, seek.com.au.
These assets have a strong foothold in the future; long derided by the lords of free-to-air TV, Foxtel is gradually changing Australians' TV habits with its IQ digital set top box that enables viewers to pause and rewind live television and record programs to watch later in a process known as "time-shifting".
In addition to online advertising, Premier Media produces programs for Foxtel, which is now in about 30% of Australian homes. Packer has been gradually selling out of the Nine network and Australian Consolidated Press, owner of the biggest magazine stable in the country, since late 2006 when a private equity company, CVC Asia Pacific, paid $4.6 billion for a 50% share in the Packer media empire and went on to form PBL Media.
Using borrowed funds, CVC bought at the very top of the then roaring sharemarket. Such is PBL's annual interest bill that it has wiped almost its entire annual profit of $460 million in the last financial year, prompting media analysts to value the company at zero.
The swaggering, rulers of the earth attitude that pervaded Nine for many years began to dissolve when it lost its once iron grip on the ratings crown last year. Since then it has shed jobs and lost any claim to be the national broadcaster by cutting its mid-evening news program, Nightline, and abandoning its high quality current affairs program Sunday.
Multiple Gold Logie winner and former Nine network darling Ray Martin described the axing of Sunday as "a dopey decision", and one that mirrored PBL's closure early this year of another Australian media fixture, The Bulletin magazine.
Meanwhile, Nine's ratings have been stronger than expected this year. It has been leading the three commercial free-to-air networks in the quest for the 16-to-54-year-old demographic, which accounts for around two-thirds of prime time advertising revenue.
But, according to media analyst Steve Allen, of Fusion Strategy, ratings for Nine's programs have been trailing off in recent weeks and it is possible Nine will end the ratings year behind Seven among both 16-to-54-year-olds and across all viewers.
"Nine has done very well with some of its programming this year, such as Underbelly, but it has also overused some of its big franchise programs, such as CSI, and, to a lesser extent, Two and a Half Men, which potentially leaves its cupboard bare for 2009," he says.
Allen says by shifting the time slots of these popular programs and running them several hours a week instead of one or two, Nine has shortened their natural life span and alienated fans.
Nine's managing director, David Gyngell, told advertisers and media buyers in Sydney this week that he would remain close to his lifelong friend James Packer but that he was "a better mate than he is a boss" and was "looking forward to proving him wrong", on his decision to withdraw from free-to-air television.
But Gyngell also told the International Advertising Association lunch that the introduction of the new multi-channels next year would erode the profits of free to air networks and could damage the quality of programs they broadcast on their existing channels. "More choice doesn't lead to more profits. The new channels are an obligation we have to undertake," he said.
Nine is clearly under pressure in the changing mediascape. Mass audiences are being replaced by myriad niche audiences as a dizzying array of new choices opens up on television and online.
Advertisers are even less likely to spend money on new channels as the global financial crisis is already forcing them to slash their budgets. To date the free-to-air networks have been slow to spend money buying or making programs to broadcast on their new multi-channels.
They are worried they will have trouble recouping their costs because the new multi-channels will most likely attract small audiences and therefore little advertising revenue.
This is why the Ten network's decision to create a 24-hour channel dedicated to sport is a significant development and a bold attempt to resurrect its own fortunes, which have been buffeted not only by the structural changes affecting the media industry but also by its own relatively poor performance in the ratings this year.
Ten's chief executive, Grant Blackley, said this week that in planning the new channel — which will be called One — a key consideration was that no other free-to-air network had a "dedicated sports channel" and that it would help encourage people to switch over to digital television.
The Federal Government will switch off the analogue television signal at the end of 2013 and has been under intense pressure from the free-to-air networks to allow them to show sports on their new multi-channels that are included on the anti-siphoning list.
This list, which covers events such as the AFL grand final, the Melbourne Cup and the Australian Open tennis, is aimed at ensuring key sporting events are freely available to everyone.
Ten's new sports channel does not include any events on the anti-siphoning list but Blackley said he would "welcome the lifting of the restrictions on what free-to-air networks can show on their channels".
Communications Minister Stephen Conroy is caught between the public policy goal of encouraging everyone to buy a digital TV and entrenching the protected status of the free-to-air networks, which, as he freely acknowledged to The Age this week, have "done a very poor job of looking after sports fans in the past". And the free-to-air networks find themselves caught between inexorably dissolving audiences and the need to invest in new channels.
For its part, the subscription television sector, led by Foxtel, fears the Government may cave in to the free-to-air networks' lobbying, which could affect the attractiveness of their own offerings to customers.
And looming on the horizon — when Australia finally gets quick broadband speeds — is the arrival of hundreds of channels of internet television, which not only pose a threat to free-to-air and subscription television but also to the national broadcasters, the ABC and SBS, who are struggling to finance local drama, news and current affairs with what even Conroy admits is severely inadequate funding.
Matthew Ricketson is media and communications editor.
(Credit: The Age)
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