Summer sport on TV is about far more than advertising revenue for Ten Network Holdings Limited (ASX: TEN), Seven West Media Ltd (ASX: SWM) and Nine Entertainment Co Holdings Ltd (ASX: NEC). It has the ability to set up the whole year by allowing the networks to expose viewers to their range of 2014 shows.
Summer sport advertising
When reflecting on blisteringly hot days spent in front of the TV watching the summer’s cricket and tennis competitions, the advertising that sticks in my mind is usually the constant stream of KFC ads, or the ever amusing campaigns of AAMI and VB.
That’s probably not what the networks would like to hear, or maybe I’m not the customer they’re trying to attract, because the big opportunity for free-to-air television stations is to advertise their upcoming suite of big name series.
So Ten, for instance, will be hoping that the bumper audiences they’ve had for the Big Bash league will correspond with a pick-up in audiences for the 2014 versions of The Biggest Loser, So You Think You Can Dance, Puberty Blues, and The Project, as well as the Winter Olympics in Sochi based on customised advertisements mid-match.
The Australian Open tennis is the first time that channel Ten will be challenged in its prime time weekday and weekend 6.30 or 7pm big bash timeslot. Since the big bash started on December 20, Ten’s share of free-to-air viewers has held steady above 17% and often over 20%, whereas this time last year it was averaging only 15% to 16%.
Viewers of the big bash have ranged from 600,000 to 900,000, however the Australian Open managed to attract between 800,000 and 1.4 million viewers during its first two nights.
The Australian Open is almost a guaranteed ratings winner, but one would imagine that viewing numbers will depend to a large extent on who’s playing. With the majority of Australians now knocked out of the tournament, viewers may move back to the big bash for more action.
It appears that investors think that Ten has the upper hand, which will result in solid audience numbers for the first half of 2014 at least. Ten’s share price is up nearly 18% so far this year, compared with 2% for Nine, and negative 7% for Seven.
Personally, I’m not all that interested in Big Brother but channel Ten has won me over with its cricket coverage and the turnaround of its business from a debt-laden company with an outdated strategy, to an agile operator with a healthy balance sheet. The only downside I can see is that Ten doesn’t pay a dividend yet, compared with Seven’s 5.5% yield.
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