First there was retailing, now car sales are down, housing is slumping and credit card transactions are slowing, but still showing some growth.
It’s a picture of falling activity in key consumer sectors of the economy, just what the Reserve Bank wanted to see.
Higher oil and petrol prices are playing a role, but the RBA’s attack on inflation is slowing the parts of the domestic economy that rely on consumption, aided by those oil energy costs, and more than half a per cent in extra rate rises from the banks.
And yesterday came more news that will bring an interest rate cut that little bit closer.
TV ad revenues hardly moved in the first half of the year, and in fact, after inflation is factored in, they went backwards for the big Networks.
And, if the Consumer Price Index, out later today, is less than 1.2%, and under 1%, then there’s every chance the rate cut could be a bit sooner than most of us expect.
The gloomy forecasts for the Australian TV industry from investment analysts has been supported by a sharp slowdown in the growth in ad revenues in the first half of the year, especially in Sydney.
Figures from free TV Australia show that regional advertising growth outstripped metro markets, especially Sydney and Adelaide where revenue fell in the first half of 2008, compared to the figures for the same period of last year.
The 1.4% fall in Sydney is especially telling as it’s the biggest market in the country and means the economic slowdown is hurting the media in that market more than any other part of the country.
Macquarie Radio Network revealed last Friday that radio ad revenues in the Sydney metro, market had fallen 1.17% in the year to June in downgrading earnings by 15% to 20%.
The overall revenue for metro and regional markets rose by less than 1% to $1,752 billion, from $1.740 billion in the same period of 2007. (2007 first half growth had jumped 6.5% over the same period of 2006.)
The five metro markets (Sydney, Melbourne, Brisbane and Adelaide), added a whole $3 million in extra revenue in the half to $1.340 billion, from $1.337 billion.
The regional market grew 2.45% to $412 million from $402 million in the first half of 2007, thanks to strong growth in regional Queensland (up 5.5%) and the Northern Territory/Tasmania, up 4.1%.
The latest figures compare poorly with the growth in the second half of 2007 of 9.42%.
That’s normally the best time of the year for TV networks, but it was further boosted by the election spending and the huge ad campaigns the then Howard Government ran in the lead up to the poll.
TV Networks also received the bonus of an extra minute of advertising a night during the 33 day campaign.
And with no boost from an election and major advertisers cutting back, the second half of this year will be bad for the networks.
Seven has the Olympics (but the costs to go with the revenue boost) and Ten and Nine will be hit by the lack of spending in the aftermath of the games and by the downturn in retailing in particular.
The latest figures show that the Seven Network remains number one, holding on to its share: it had a 39.13% share of revenue, compared 39.18% in the first half of 2007 and 38.35% in the December half.
Seven had been tipped by some excitable commentators to suffer a sharper fall in revenue share because of ratings gains made by the Nine Network in the first half. Seven’s revenue share is still well above its commercial 36% ratings share.
Nine lost share: in the latest half it had 31.7% of metro revenue, compared to $32.7 in the same half of last year. Nine had a first half prime time ratings share of 35.6%. Nine’s first half 2008 revenue share was up from the 30.8% share in the December half.
Ten lifted its share to 29.08% from 28.10% last year. But that was lower than the 30.8% share Ten had in the December half of 2007. Ten last month warned of a 10% drop in 2008 earnings because of falling revenue and the impact of the Olympic Games.
The warning surprised the market, but it’s a bit easier to understand with these figures. Ten had a prime time first half ratings share of 28.4%.
Besides the drop in Sydney revenue (down $7.1 million), Adelaide saw a 0.33% drop to $104.2 million from $104.6 million.
That’s bad news for Bruce Gordon’s privately-owned WIN Group which paid around $105 million for the Nine station in that market last year.
Perth was the best performing market, with revenue up 3.8% to $140.23 million (from $134 million in the first half of 2007). That in turn is good news for WIN and Mr Gordon, who paid $163 million for the Nine station in that market last year.
Growth in the Brisbane market was almost 2% to $227.1 million while Melbourne had a tiny 0.19% growth in revenue in the latest half to $367.87 million.
The Seven Network reminded everyone that it was still the number one network, Nine said it was encouraging and it expected to build on the first half ratings gains, while Ten pointed out that it, among the three networks, had lifted its TV ad revenue share from the first half of 2007 to this year.
But in reality the TV revenue figures was much better news for Prime TV and for Macquarie Media, which acquired the Ten Network affiliate broadcasting business in Southern Cross Broadcasting last year.
At least they are enjoying some growth, even though it’s behind inflation.
But the second half of this year is going to be much tougher than the networks allude to: costs are on the rise and revenue is on the slide.
Cutbacks wouldn’t surprise towards December in at least one, possibly two networks.
Seven Network shares fell 20c to $7.70; Consolidated Media Holdings shares (i
