Commercial free-to-air TV is the largest product segment of the industry. According to Screen Australia, there are 54 commercial TV stations (15 metropolitan and 39 regional). This segment is highly driven by advertising revenue and profit. It competes strenuously against other main media, including pay TV and new digital media, to maintain its share of the total advertising market. Its emphasis is on providing sports, news, entertainment, drama and, particularly over the past decade, reality TV.
Another component of the industry is the public broadcasters, which include the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service Corporation (SBS). The ABC provides national broadcasting services through the transmitters operated by the National Transmission Agency. The agency was targeted for privatisation by the Federal Government, but this has now been delayed. The new organisation will have five-year contracts to provide these services to the ABC and SBS.
There are 80 licensed community TV stations funded by government grants, but most funding comes from sponsorships and significant voluntary input. This segment is always financial vulnerable because it has no guarantee of continuous funding. Most stations consist of local and special interest TV broadcasters. The urgent issues confronting these stations are the cessation of all analogue transmission in 2013 and the high cost of digital broadcasting, stemming from capital equipment.
Seven West Media Ltd (19%) , Nine Entertainment Co Holdings Pty Ltd (18.5%) , Ten Network Holdings Ltd (18%) , Other (13.7%), Australian Broadcasting Corporation (12.7%), Win Corporation Pty Ltd (11.9%) , Special Broadcasting Service Corporation (6.2%).
Over the next five years, IBISWorld expects the industry will have to contend with an increasingly competitive operating environment, particularly against new digital media such as pay TV and internet TV. Total TV audience numbers have been declining and the new standard-definition and HD broadcast TV channels are expected to fragment audiences, with little increase in advertising revenue and rising costs.
The integration of TV broadcasters with new digital media, such as mobile phones and internet sites, will need to expand significantly. This is vital if the industry is to maintain its relevance to a wider audience, particularly young people and adults. Increasing expenditure on local drama programs is occurring, following changes to film subsidies by the Federal Government.
Furthermore, a decline in the national audience watching free-to-air TV is expected, despite further developments in new digital media for commercial TV. There will be further diversion of advertising towards direct promotional activities and away from costly main media. Growth in the pay-TV audience is anticipated, which will affect the industry because pay TV is a direct competitor for TV audience viewing numbers and market share. This will occur despite major national TV networks having already moved into digital broadcasting, with HD and new standard-definition channels available since 2009. Some integration of broadcasting and other activities will occur, especially through the internet and websites with catch-up TV downloads available for viewers.
Nonetheless, as consumers let the events of the global financial crisis become a distant memory, greater demand for goods and services will drive greater demand for advertising dollars, which will help lift the industry out of its slump. During 2013-14, industry revenue is expected to grow 3.1% to $5.13 billion. Over the five years through 2017-18, industry revenue is forecast to grow at an annualised 4.0% to $6.06 billion.
Industry profitability will improve somewhat in the medium term, due to past industry consolidation activity and expenditure reductions. High levels of competition will continue, especially for advertising dollars across all media streams.
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