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Free-to-air broadcasters will face more pain if this goes ahead

Pay TV has set its sights on the commercial TV networks last remaining gold nugget.

The Australian Subscription Television and Radio Association (ASTRA) is after the estimated 1,300 events on the anti-siphoning list. The list contains sporting events that are broadcast by the free to air (FTA) networks, such as cricket, AFL and NRL matches.

Now ASTRA wants sporting bodies to be able to sell their events to FTA as well as pay TV in parallel, and has taken the proposal to the Federal government, according to the Australian Financial Review (AFR).

Chief executive of ASTRA, Andrew Maiden says the record $1.25 billion broadcast rights deal between the AFL and Seven West Media Ltd (ASX: SWM), Foxtel and Telstra Corporation Ltd (ASX: TLS) was a good model for other sporting codes. Foxtel is jointly owned by Telstra and News Corp (ASX: NWS).

Mr Maiden says the anti-siphoning mechanism prevents sporting bodies from having more control over the rights to their events, and it should be up to those bodies whether they sell the rights to subscription providers or the free-to-air networks.

Outlining the issues the television industry faces, Mr Maiden has told the AFR that pay TV hasn’t been able to grow its subscribers meaningfully over the past few years, while the FTA networks, including Ten Network Holdings Limited (ASX: TEN), Seven and Nine Entertainment Co Holdings Ltd (ASX: NEC) face increasing advertising revenue pressures.

Illustrating the issue, Network Ten recorded its worst weekly audience share ever last week, with its share falling to 13.8% of total audience, behind even the ABC, which had 17.9% of the audience. We’ve long suggested that given the falling FTA advertising revenues, there is no longer room for three profitable commercial networks in Australia, and the demise of one is only a matter of when not if.

Foolish takeaway

While most Australians would like the option of watching sporting programs for free, in the past, the FTA networks have treated viewers as second class citizens, delaying ‘live’ broadcasts and not showing some matches despite holding the rights to the event. Having the option to pay to get access to full series, and real, live events would be a benefit to most consumers.

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Motley Fool writer/analyst Mike King owns shares in Telstra. You can follow Mike on Twitter @TMFKinga

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