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Seven surges while Ten falters

Seven West Media (ASX: SWM) has seen its share of the metropolitan television advertising market soar to 43.3% in September, well above its rivals.

Thanks to the popularity of the Australian Football League (AFL) Finals, Seven’s share of the ad market rose from 39.5% in August. It is the highest level ever recorded by Seven since January, when it posted a 45% market share, according to the Standard Media Index, which collates ad spending by media buyers.

The National Rugby League (NRL) final, broadcast by Channel Nine, took place in October, helping Seven outperform its rivals in September – and suggesting that Nine should win back some of its market share in October.

Nine recorded a slight drop in its market share during September, at 36.8% of the metropolitan market, compared to 38.4% in the previous month. Perennial wooden spooner, Ten Network Holdings (ASX: TEN) saw its advertising market share drop below 20% of the market, with a 19.9% market share.

For the year to date, Seven has 41.1% of the metropolitan market, followed by Nine with 36.9% and Ten bringing up the rear with 21.9% market share. A Ten spokesperson has told the Australian Financial Review, “Our revenues and revenues share are not where we want them to be, but the September numbers show that our revenue has stabilised.”

Ten recently launched a new website as well as apps for iOS and Sony Bravia that allows consumers to catch up on Network Ten shows anytime and anywhere, as well as access streaming live content. The broadcaster has struggled in recent years to match the quality of programming offered by its rivals, and is running fast in an attempt to catch up.

A potential game changer for the free-to-air television industry is the Coalition’s commitment to scrap the so-called reach rule, which would allow mergers between the major networks and their regional broadcast partners. Seven West announced last week that it had signed a new affiliate agreement with Prime Media (ASX: PRT), while Nine Entertainment has already purchased the Channel Nine and Adelaide television stations from its affiliate WIN Corporation. Nine has been rumoured to be considering dumping WIN, so it can do a deal with Ten’s regional affiliate, Southern Cross Media Group (ASX: SXL).

Foolish takeaway

Whether Ten has done enough to continue in the free-to-air (FTA) space remains to be seen. As the FTA advertising market shrinks, broadcasters need to find new ways of generating revenue. Some media commentators have suggested there’s only room for two FTA broadcasters, and Ten looks like it’s holding the short straw at the moment.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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