Channel 10 May Save Broadcasting

12 Dec 2014

Channel Ten is up for sale, and broadcasters all over the world want in.

According to the ratings, Ten are losing their edge.

Discovery Channel and Foxtel are the two major players looking to acquire Ten.

“Ten was the third channel to come along. It was in a difficult position. It was the fourth licence after the ABC, Channel 9 and Channel 7. They were coming in from behind,” said Professor Tom Smith, a Professor of Finance at UQ Business School, The University of Queensland.

Yet it was only a few years ago that Ten captivated the young market, screening shows including The Simpsons and Australian Idol.

“Then it [Ten] did very well and mainly targeted a younger audience. They’re the ones that advertisers like because they spend on the trendy stuff. The programming was going towards that and it was edgier,” Professor Smith said.

In the early 2000’s, Ten was arguably the most profitable Australian broadcaster.

Ten’s success with young Australians was short lived. Streaming TV shows online became the practice for Ten’s mainly market and they quickly slipped through the ratings.

“They [Ten] changed management and are now targeting the middle aged and older audience which is not all that profitable because that’s what Channel 7 and Channel 9 do. They didn’t have a comparative advantage.

“Maybe there is a little bit of mismanagement, so that’s what got them in this position. You’re then behind in the rankings and it’s hard to get out. Advertisers would be looking at Channel 7 or 9 first,” Professor Smith said.

All considered, it sounds like Ten’s future is bleak. Yet, Professor Smith believes Ten still has value.

“Ten has a valuable asset in place. That is, the right to broadcast in Australia. That is hard to get,” he said.

“For someone like the Discovery Channel from the USA who have a lot of content, Channel 10 is a valuable asset in place which gives them broadcast rights. Some of their edgier programs could be suitable for a young audience as well,” Professor Smith stated.

In terms of shareholders, Professor Smith says that all the major shareholders will have to agree in order to determine Ten’s future.

“Shareholders come into play because they have substantial shareholdings. Murdoch and Packer have about 18 per cent combined. Reinhardt has about 10 per cent.

“Gordon is the other one and he might be the crucial person in that he might be against it. The others are keen to get some money and get out. But anyone with 10 per cent or more can block the full takeover. Gordon may be able to block this.

To ensure Ten regains ratings and profit, their future business model may include sports, local news, and quality television.

“You have to offer people something that they want which is something like local news, live sport or superior content like Game of Thrones, like a break out show that people want to watch,” Professor Smith said.

Yet, Professor Smith is certain that whatever happens, the business model needs to capture young people who turn to the Internet for entertainment.

“They’re going to have to take into account the realities of the way people get their entertainment. My kids don’t watch any network TV. They stream all their shows online.

“The model that they’ve [network TV] been running will not continue into the future. They have to be doing newer things.

“Maybe a takeover from an international company who is aware of all these things might help Channel 10 survive,” said Professor Smith.