Network Ten was hit this week with a bleak report from CLSA Asia Pacific, which downgraded its stock recommendation to “underperform” and declared that Ten’s news audience “doesn’t just look bad, it looks terrible”.
Conjecture has been swirling since December that if Ten’s news format did not work quickly, the network’s new media mogul shareholders James Packer and Lachlan Murdoch, would use the results to oust Ten’s chief executive Grant Blackley, despite Ten recently extending his contract (before the new shareholders joined the board).
The new primetime news format spearheaded by George Negus had come under fire from Packer and Murdoch before it even launched. The position of mining mogul Gina Rinehart, who has also dealt herself into sizable share parcels of Ten and Fairfax Media, remains unclear.
Media buyers report Ten has been “very aggressive” on airtime pricing in the spot market in recent weeks although Seven and Nine also acknowledge the TV market has “shortened” in February.
CLSA’s analysis this week said “there isn’t much room for optimism” at Ten. “Our previous buy thesis was premised on 2011-12 (financial year) revenue share upside for Ten driven by Ten being the only network to launch a new channel in 2011 and Ten news strategy promising to stem the 40% audience declines previously suffered by Ten during the 6-7pm window,” CLSA’s Digby Gilmore wrote in his investor note.
“So what’s changed? Well basically the news-led core channel is trending so terribly it’s more than offsetting (Eleven’s) audience gain.”
Gilmore said the first three weeks of ratings for Ten’s 6-7pm news hour saw audiences averaging out flat year-on-year. Week 2 however, was down 17% and week 3 slumped 34%. “We note the potential relisting of rival TV networks Seven and Nine. Both have started the year with ratings momentum superior to Ten…” Digby said. “We are concerned by the worsening trend, particularly given the audience gap that now exists in the news hour with Seven, Nine and Ten attracting 6-6.30 pm news audiences of approximately 1.2 million, 1 million and 400,000 respectively. Not much of a springboard into primetime for Ten.”
But media buyers such as Mark Kennedy, managing director of Vivaki Exchange, which aggregates media investment for Starcom and ZenithOptimedia, said CLSA’s analysis was hasty.
“It’s too reactive,” Kennedy said. “I think they will find a solution. They’ve got form with the 7pm Project. It looks like a pretty steep hill and yes the news slot is a high profile, big spending area which needs some work. But they’re not without their positives in that camp.”
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