Pay TV sceptic concedes better outlook
Sydney Morning Herald
Friday April 2, 2010
A LEADING sceptic of the pay TV industry's future as an advertising medium has been forced to raise his forecast for the sector in the face of a resurgent television ad market.After predicting earlier this year that ad revenue for pay TV would shrink by 2.1 per cent in 2010, Henry Tajer, the regional chief of the media agency Universal McCann, is revising his forecast."We are going to have to revise it [the entire TV market] up at least to 5, maybe 5.5, per cent for metro and regional markets and that's going to have a positive effect on pay TV," said Mr Tajer, whose clients include two of the nation's largest ad spenders, Coles Group owner Wesfarmers and the federal government.Mr Tajer would not be pinned down on a forecast for pay TV, saying his agency was still working through the figures."It could get into the positive, but I can't say at the moment," he said.Earlier this year Mr Tajer said Universal was the "first agency" to predict pay TV ad revenues would decline this year. He has also had to fend off claims he is biased against pay TV because one of his clients is Ten's digital sports channel, One HD.Despite the revision on revenues, Mr Tajer said audiences on free-to-air digital channels such as Go, 7Two and One HD, which were launched last year and are capturing 9.7 per cent of all TV viewing, provide a more efficient alternative to pay TV."In some cases the reach we deliver through the multi-channels is much more efficient and timely than what we would do on pay TV.""You are getting one [digital free-to-air] channel aggregating an audience that it would take 12 [pay TV] channels to deliver those reach levels. The maths stack up for multi-channels."Another analyst, Steve Allen of Fusion Strategy, has gone further, predicting pay TV will reach a high-water mark in revenue and audience as free-to-air digital channels stymie the growth of pay TV subscriptions."On all three measures - subscription, audience and revenue - this is the year they will reach a peak. There's a head of steam building up against them. We think their audience will halve and their [ad] growth rate will halve."Both pay and free-to-air TV camps are claiming the launch of digital free-to-air channels is benefiting them.Pay TV says its audience is rising and that the multi-channels are cannibalising their own main free-to-air channels - a fact acknowledged by the TV networks.But the free-to-air industry says the multi-channels are impeding take-up of pay TV and say that, because the audience measurement panel has changed, comparisons between this year and last cannot be made.Even some within the pay TV industry admit the recent trend of at least 12 per cent annual growth is over; last week CEASA reported the industry grew by 4.9 per cent, albeit in an overall market that declined by 8 per cent.Anthony Fitzgerald, chief of Foxtel's sales arm, MCN, declined to comment, but Brian Gallagher, chief of Full Circle, the ad sales house for 15 smaller pay channels, said growth levels of the past were over because of the much bigger size of the base; pay TV was now a $335 million medium."But I still think there's plenty of upside. If you look at the audience share of about 22 per cent and the share of ad revenue, which is in high single digits, then there's still capacity to grow."
© 2010 Sydney Morning Herald
