What a mirage as shares in Australia’s free-to-air TV and radio networks have jumped after the federal government cut in broadcasting licence fees for the next financial year by regulation until a more permanent cut can be achieved in the Senate later in the year.
Nine Entertainment shares hit a year-high of $1.395, up 4.5%, while Southern Cross Austereo shares leapt 7.1% to $1.28, Prime Group shares were up 4.5% to 34.5 cents and shares in Seven West Media rose nearly 4.2% to 73.5 cents.
Ten of course has collapsed – the previous cuts in the fees having provided no help whatsoever to the struggling network except to stave off the day of reckoning.
And previous cuts have not helped the surviving free to air companies (or radio companies). Earnings are weak, revenue is falling, employment is lower and ratings are sliding.
The federal government on Wednesday announced it would use its regulatory powers to abolish $127 million in broadcast licence fees for 2016-17 as an interim measure ahead of permanent regulations passing parliament.
The government has proposed replacing licence fees with cheaper spectrum usage charges for broadcasters that are expected to raise $43.5 million.
The licence fees cut was a key component of the media reform packaged announced in the federal government’s budget in May.
Nine Entertainment Co says the move will save it approximately $33 million, and now expects its full year earnings to lift between $200 million to $210 million, up from $158 million to $187 million previously expected.
Southern Cross Austereo said it will be $11.8 million better off in the current financial year.
“This provides welcome relief for our industry, which is challenged by increased competition from large multinational tech and media companies,” Free TV Chairman, Mr Harold Mitchell AC said in the statement from Free TV Australia.
“In the internet age, it makes no sense to continue to impose the world’s highest licence fees when these foreign media tech companies pay nothing,” Mr Mitchell said. “Licence fee relief is critical for broadcasters to invest and transform their businesses. It is now up to the Senate to do its part in permanently replacing the licence fee with a spectrum charge.
“It is crucial for Australian jobs and our ability to continue creating great local programming that the Parliament passes the media reform package in August. If we are serious about diversity of Australian voices, we have got to get serious about comprehensive media reform. We cannot allow local media companies to continue being strangled by out-dated media ownership laws,” Mr Mitchell said.
But will anyone check to see if the fee abolition flows through to more jobs or programs. After all, the fees have already been cut by the Rudd and current governments from 9% of revenue to 4.5% of revenue and the industry’s overall performance is worse than it was half a decade ago.
Ten is broke and in administration, Nine and Seven, Prime and Southern Cross have all followed Ten in slashing the value of their TV licences because of falling revenues, ratings and profits. Employment is lower and the abolition of the fees for 216-17 won’t change the outlook one bit, no matter what Harold Mitchell thinks.
Parliamentary debate on the Media Reform package will commence in early August, there is no certainty that the changes will occur, especially the ownership section.
