Motley Fool Australia

Now its free-to-air networks who want government help

With Qantas asking the federal government for help, other industries and companies are hopping on the ‘me too’ bandwagon and asking for government assistance.

Although, judging by recent media reports, Qantas needs to get its own house in order without government support.

Now TV broadcasters claim they have a ‘special place’ in the community, and warn the government they are facing an unprecedented threat from overseas entrants.

I think ‘special’ to them means a structurally declining business.

Trade body Free TV, representing Channels Seven, Nine and Ten want the government to drop the licence fees the broadcasters pay, as well as other regulatory changes.

Nine Entertainment (ASX: NEC)Seven West Media (ASX: SWM) and Ten Network Holdings (ASX: TEN) are facing giants such as Google’s YouTube and Netflix who are placing massive pressure on their advertising revenues.

Advertising is migrating from the free to air networks online as more viewers abandon free-to-air entertainment.

Apart from sport and news, free-to-air networks offer very little that can’t be viewed on other media – and that’s probably not enough to sustain Australia’s three commercial networks.

Ten’s coverage of the Big Bash domestic cricket competition in January failed to deliver the big boost to its revenues as expected.

Much like the bowlers in that series, Ten has been hit for six.

Media networks also want ownership rules amended, to allow metropolitan and regional broadcasters to merge.

That seems to be a forlorn hope built on focusing on what has worked in the past.

Much like Myer Holdings (ASX: MYR) and David Jones (ASX: DJS) hoping a friendly merger, and the roll out new retail stores, will save them from an onslaught of more innovative and highly efficient overseas rivals invading our shores.

Foolish takeaway

In both the retailers and networks cases, management seem to be missing the point, and will be lucky not to be steam rolled by competitors with their eyes on the road ahead, rather than the rear vision mirror.

Good luck to the networks, but you won’t find me investing in any of the three any time soon.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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