5 Major Free To Air Television Stations example essay topic

Introduction: The Television Industry has been running now for the last 49 years, it consists of 5 free-to-air television stations (ABC, Seven Network, Nine Network, Ten Network and SBS) and 3 pay-tv stations. Two of the five free-to-air networks are government funded (ABC and SBS). All free-to-air stations are based in every capital city in Australia. All free-to-air stations cover all of Australia, some rural areas have local television stations as well as nation wide stations.

This report will cover the television industry of both Free-to-air and Pay TV. Market Structure: The Television Industry is a large industry in Australia. It has contributed $1.2 Billion to the Australian economy and employed more than 20,000 people. (web) It is not as big as the cinema industry but it's getting closer. There are two kinds of television in Australia, free-to-air and pay TV. There are 5 major free-to-air television stations but two are government funded. In some parts of Australia there is also local television featuring local programs e.g. Briz 31.

The pay TV industry is growing rapidly with a far variation of channels for viewers to choose from. The first pay TV company to enter Australia was Foxtel when it came in 1995. Other major contenders are Optus and Austar. Previously these different companies had their own channels and they were competing against each other. But Foxtel by far had the best movie channels and sport channels. Then recently the A (Australian Competition and Consumer Commission) gave the approval of 'channel sharing' between players. (web) This made all pay TV companies share their channels so it would be a fair market.

Foxtel is the largest subscription television operator in Australia closely followed by Austar and then Optus TV. Pay TV stations does not cover all of Australia as some companies fight for the rights of particular areas. e.g. Austar bought the rights of the Gold Coast area so now Foxtel can't sell their station in Gold Coast. Now with the introduction of Digital Television this will revolutionize television in Australia all together. Foxtel was the first pay TV provider to have this new technology followed by Austar. Optus TV hasn't got this new technology yet. But it isn't just pay TV that has this technology, free-to-air also has it but viewers have to purchase a set-top box to use this new technology free of charge.

Free-to-air stations: o ABC - Government Fundedo Seven Networko Nine Networko Ten Networko SBS - Government Fundedo Briz 31 - Local Television station Pay TV stations: o Foxtel Optus To Austar In total there are 24 separate commercial television markets in Australia in 2002/04, and 48 individual television stations. Most Australian commercial television stations are owned by public companies listed on the ASX. The Australian Government is the owner of the ABC and SBS television services. Free-to-air television 2002/03: Markets and ownership as of June 2003 Ad. revenues ($m) Population ('000s) Ad. revenue per capita ($) Ownership 1 based on network affiliation Seven Nine Ten Metropolitan markets (5 markets and 15 stations) Sydney 820 4,310 190 SEV PBL TEN Melbourne 669 4,009 167 SEV PBL TEN Brisbane 364 2,482 147 SEV PBL TEN Perth 235 1,546 152 SEV STV TEN Adelaide 180 1,309 138 SEV SCB TEN Total metropolitan 2,268 13,656 166 Aggregated regional markets (5 markets and 14 stations) Northern NSW 150 1,870 80 PRT WSP 4 SCB Queensland 136 1,457 93 SEV WIN SCB Southern NSW 124 1,333 93 PRT WIN SCB Victoria 119 1,084 110 PRT WIN SCB Tasmania 46 477 96 SCB WIN Subtotal aggregated regional 575 6,221 92 Other regional markets (14 markets and 19 stations) Total other regional 91 1,438 63 3 3 3 All markets 2,934 21,315 138 Source: Australian Broadcasting Authority, ACNielsen & ATR Australia Free-to-air television is coming second to newspapers in terms of share of total advertising expenditure in Australia. It is the preferred media in terms of national advertisers, accounting for 53 per cent of all such advertising.

And it provides them with a greater audience. Advertising is the main source of revenue for commercial stations, while direct funding from the Australian Government is the main source of revenue for ABC and SBS. Estimated revenues from various sources for free-to-air television services, 1996/97 and 2002/2003 Estimated revenues 1996/97 2002/03 Government funding ($m) Advertising revenue ($m) Other revenue ($m) Total revenue ($m) % change 96/97 02/03 96/97 02/03 96/97 02/03 96/97 02/03 Commercial stations 0 0 2,375 2,934 183 517 2,558 3,451 35%Seven Network & affiliates 0 0 817 927 56 91 873 1,018 17%Nine Network & affiliates 0 0 905 1,114 70 365 975 1,479 52%Ten Network & affiliates 0 0 574 829 53 56 627 885 41%Unaffiliated regional's 0 0 79 64 4 4 83 69 -17%Non-commercial stations 334 506 12 22 81 119 427 652 53%ABC 1 (estimates) 280 401 0 0 75 104 355 505 42%SBS 1 (estimates) 54 105 12 22 6 15 72 147 104%Total all stations 334 506 2,387 2,956 264 636 2,985 4,103 37%Source: Australian Broadcasting Authority, Australian Broadcasting Corporation, Special Broadcasting Service Corporation, Global Media Analysis estimates The whole of the Australian television industry spent an estimated $3,327 million dollars, excluding interest charges in 2003. The industries two largest expenditures were programming and employees. (web) Estimated operating cost structures for free-to-air television services, 1996/97 and 2002/03 Operating costs 1996/97 2002/03 Revenue related costs ($m) 1 Other costs ($m) 2 Total costs ($m) 3% change 96/97 02/03 96/97 02/03 96/97 02/03 Commercial stations 488 487 1,522 2,203 2,009 2,690 34%Seven Network & affiliates 162 151 532 834 694 984 42%Nine Network & affiliates 198 185 596 853 794 1,037 31%Ten Network & affiliates 111 142 337 467 448 609 36%Unaffiliated regional's 17 9 57 50 73 60 -18%Non-commercial stations 0 2 427 635 427 637 49%ABC (est.) 0 0 355 505 355 505 42%SBS (est.) 0 2 72 130 72 132 83%Total all stations 488 489 1,949 2,838 2,436 3,327 37%Source: Australian Broadcasting Authority, Australian Broadcasting Corporation, Special Broadcasting Service Corporation, Global Media Analysis estimates In the mid 1980's and early 1900's there was many ownership changes that occurred in the television industry that caused an abnormal loss to the whole industry during this period. But by the end of the decade it had reached reasonable levels of profitability. However in 2001 and 2002 profit margins were brought down due to an unexpected decline in advertising revenue.

But in 2003 the industry saw it crawl back to a modest recovery in revenue, margins and profits. The non-commercial networks (ABC, SBS) made a distinct increase of audience from 13.7% in 1990 to 18.4% by 1999 (web). The rest of the competitors were going at a steady pace, the Nine network had an average annual overall prime time audience share during the decade of 32.2 per cent and always won the annual ratings race, followed by the Seven Network with an average of 29.8 per cent share, with the Ten Network trailing as a distant third with an average 21.3 per cent share. (web) But in the middle of 2000 there was two major differences which made a dramatic change to the ratings of the television networks. First a highly successful broadcast of the Sydney 2000 Olympic Games boosted the ratings of the Seven Network with a 32.2% share. (web) Secondly a new ratings system joined (known as OzTAM) all three networks which showed the Seven and Nine networks ratings were closer than previously indicated by the preceding rating system operated by AC Neilson.

The commercial stations attracted the most of free-to-air television viewing. The three commercial stations attracted 80% of the share and the non-commercial (ABC, SBS) attracted the rest. But both the ABC and SBS have increased there rate at a steady rate and in 2002 and 2003 their results have been the highest ratings ever in 20 years. Television stations attract viewers by putting a variety of television programs aiming at particular age groups. The Seven network aims at young to middle aged people with their Australian programs such as Home and Away, Blue Heelers and All Saints as well as the Athens 2004 Olympic Games and Rugby Union matches.

The Nine network aims for viewers of all ages with programs such as Download, New Mc Donald's farm for the young viewers, the variety of sports through Wide World of Sports for all ages, the lifestyle shows such as The Block, Changing rooms, Backyard Blitz, Burkes Backyard etc. for Adults, the Ten network with its wide variety of crime dramas like NCIS, Law & Order, Law & Order: Criminal Intent, Law and Order: SVU for young viewers and its large number of movies. The non-commercial stations are different in variety. The ABC shows a number of educational programs for children e.g. Playschool as well as cartoons. They also feature a lot of documentaries on Australia and the world, they also show a number of local as well as international sports e.g. Australia vs. Sri Lanka Cricket test match, Queensland Cup (Rugby League), Netball and lawn bowls.

SBS features a lot of multicultural based programs and documentaries as well as a wide variety of sports like World Soccer, Athens 2004 Olympic Games and athletics events. Some of these shows hit the highest number of ratings which could determine the most popular television station. But for free-to-air viewers they have to purchase a set-top box to use this technology which boasts in providing viewers high definition picture quality, better sound quality, widescreen shows. And for sport lovers you can also change camera angles for whatever you want.

Basically it's the same features for pay-tv viewers but they control the programs that they want to watch and the news they want to see. But with this new technology will it change the Australian television industry? That's a question that we can only answer in the future. Pay TV Pay TV came in the early 1990's when it coincided with the partial deregulation of Australia's telecommunication industry.

Australia's two dominant telephone companies became involved in pay TV in order to expand the home entertainment market. Each company built its own cable infrastructure and they used pay TV to dominate the $5 billion telephone market. (web) This vision of pay TV as part of a broader set of services underlined by the 'channel sharing' arrangements introduced in November 2002, which not only allowed the pay TV operators to offer customers the same packages of programming, but also allowed Foxtel shareholder Telstra to bundle a Foxtel pay TV subscription with its phone and Internet services, mirroring what Optus had been doing for several years. Foxtel which is owned by Telstra (50%), News Corporation (25%) and Publishing and Broadcasting Limited (25%), is the most powerful player in the Australian pay TV area, it also has the most subscribers and the most extensive reach on its combined cable and satellite networks. Foxtel Digital was released in March 2004 with new services like enhanced programming and picture quality, interactive services and video-on-demand channels. Austar which mainly provides satellite services to around 400,000 subscribers (second largest next to Foxtel) in rural and regional centres largely across Eastern Australia, as well as Hobart and Darwin.

Denver-based UnitedGlobalCom (UGC) and Australian private equity firm Castle Harlan Australian Mezzanine Partners (CHAMP) control 81.3 per cent of Austar. Austar has carried the most varied and diverse range of programming compared to any other pay-tv network in Australia. Optus which is owned by overseas company Sing Tel (Singapore Telecommunications) sells its pay TV packages to customers through a high speed cable network in Sydney, Melbourne and Brisbane. Along with local and long-distance phone call packages. It resells Foxtel's channels but also has its own like MTV Australia and Odyssey and Ovation. Optus doesn't have digital TV yet.

Foxtel and Optus are the main players in the metropolitan areas with Foxtel giving its services to Optus, and both Optus and Foxtel give away pay TV with telecommunication and internet packages. Austar provides services in regional and rural areas, as well as Hobart and Darwin. There are also smaller companies that serve a particular area like Neighborhood Cable (regional Victoria) and TransACT (ACT), or provide a particular kind of service like TARBS (multicultural with 20 different languages). Ownership, areas of operation, channels offered, potential market and subscriber numbers for the three main pay TV operators, June 2004 Ownership Areas of operation Delivery systems Foxtel Telstra 50%; News Ltd 25%; Publishing and Broadcasting Ltd (PBL) 25% Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra, Newcastle, Central Coast (NSW), Geelong, Gold Coast (Qld) and regional WA Cable, DTH satellite Optus TV Singapore Telecommunications (Sing Tel) 100% Sydney, Melbourne, Brisbane Cable Austar United Communications Ltd Denver-based UnitedGlobalCom (UGC) and Australian private equity firm Castle Harlan Australian Mezzanine Partners (CHAMP) control 81.3% of Austar Regional and rural Australia; Hobart and Darwin DTH satellite; cable network for Darwin only due to climate; wireless cable network 1 Neighborhood Cable Public company listed on the Australian Stock Exchange Mildura, Ballarat Geelong Cable TransACT Jointly owned by ACTED Corp Ltd, TVG Transact Holdings, AGL TransACT Pty Ltd, Marconi Corp plc, Australian Capital Ventures Ltd, Commonwealth Bank of Australia, MTA A Superannuation Fund (TransACT) Utilities Pty Ltd and Westcheme Pty Ltd Canberra, Queanbeyan Cable TARBS TARBS (World TV Australia Pty Ltd) Australia wide; Asia / Africa; US DTH satellite Source: web web web web web web Communications Update Issue 165 December 2003 Revenues, costs and operating profit / loss before tax for pay TV broadcasters, 1996/97, 1999/2000 1996/97 1999/00% change Revenues ($m) Subscription and membership fees 311.4 789.1 153.4%Other 103.2 121.7 17.9%Total revenues 414.6 910.9 119.7%Costs ($m) Wages and salaries 258.6 159.4 -38.4%Payments to channel providers 249.2 469.8 88.5%Depreciation and amortization 216.8 390.0 79.9%Other 748.6 596.4 -20.3%Total costs 1,473.1 1,615.7 9.7%Operating profit / loss before tax ($m) -1,058.4-675.8 36.1%Source: ABS, Television Services (cat. no. 8559.0) 1999/2000 Conclusion: In conclusion the television industry is making profits in both the free-to-air and pay TV arena. And both services have got the latest technology (Digital TV) for viewers.

But with this new technology there might be better broader things to come in the future. Overall the television industry is making great progress and will be here possibly for a lifetime. But here are some recommendations for the free-to-air network in terms of making a profit for possible a lifetime: Recommendations: 1. Increase the price value for advertisers to advertise but only use this tactic when no profit is being made. 2.

This should only be used if television industry is in grave danger or if there is a massive loss in profits: The distribution of TV licences for all homes using free-to-air services (similar program UK uses) without any advertisements during programs. (with a flat rate of $10 a month) to use similar program to UK visit web frame set. html 3. Television companies can purchase shares from other companies to increase revenue and profit. 4. Labours new proposal of bringing in a new television station would not make a difference in the long run in terms of advertising revenue.

Bibliography

o 2003, Australian Film Commission, web 2000, web 1999, Australian Film Television and radio school, web.