Aggressive push to develop local content will protect Seven’s revenue
Channel Seven is taking an aggressive push to increase the amount of local content to protect its most lucrative revenue stream, as online access to international content has driven down the value of third party deals.
Tim Worner, CEO of the Seven West Media group, said the number of hours Seven showed its own content increased by 15 per cent this year and more than half of its primetime shows are the network’s own productions.
At yesterday’s half-yearly results presentation he claimed this sets Seven apart from its free to air competitors at Nine and Ten, and will support the launch of Hybrid Broadband Broadcast Television (HBBTV) in May.
“We see an important part of our future is being in control of our own destiny and that is producing more and more of our own content,” he said. “It grew 15 per cent in that period, and we will be looking at doing the same thing again.”
The network is also looking to strike a new longer term deal with the AFL, which it paid more than $1bn for a five-year contract for in April 2011, with Worner telling The Australian: “We have a long-term partnership with them. Are we having talks with them? Yes. It’s nothing out of the ordinary.”
In addition the network will walk away from expensive content deals with third parties, when ratings do not deliver results for the show.
“Our philosophy is that we won’t hang onto anything at any price,” Worner said. “We are prepared to walk away from things when they don’t make financial sense. It’s not a walk that we particularly enjoy making, but sometimes you have to do it and we’ve had to display that discipline on a number of occasions.
“There’s no question that those deals are going to be governed by the ratings and its easy to see we’ve gone from an environment where US content completely dominated the top 20 to an environment where Australian-made content completely dominates the top 20.
“That US content is increasingly available in multiple sources so therefore the value of it is going to decrease.”
Meanwhile the value of local content is rising with demand growing for original content produced by Seven and formats such as My Kitchen Rules now sold in over 160 countries.
Seven leveraging that content through their joint venture with Beyond, which focuses on developing shows for the US market and working on initiatives to increase the content offering in Europe, Worner said.
“Sale of international content is a very small percentage of our revenues but growing, and obviously by the announcement of the JV, and what we’re looking at doing elsewhere, we’re focused on growing it even faster,” Worner said.
Seven is also leveraging its television content to acquire digital rights as well, Worner said.
“It’s also another one of the reasons why we’ve very aggressively increased the amount of content that we produce ourselves, because the best negotiations you can have with content are those with yourselves,” Worner said.
In publishing Worner said Seven West Media is ready to roll out a new digital platform, called Newsgate, that will allow them to publish content once for it to be distributed to multiple platforms. Newsgate will be implemented through the West Australian’s editorial department, and rolled out across its 23 regional newspapers.
The magazines division grew to 28 per cent in the first half up from 25 per cent last year based on the latest SMI data, Worner said.
So more ripping off ideas from third party producers is on the cards.
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Except Seven’s INXS drama was high budget and required Screen Australia finance as well. The difficulty with third party production is that if it doesn’t work you have to sit in the corner for a while. With in-house all is forgiven and another show soon goes into production. But putting that aside the internet has forced the broadcasters to put more original content to air as it is the only material which can’t be pirated. It is a refreshing change from 20 years ago where they could just rely on a constant flow of cheap US shows. It really will sort out the sheep from the goats. Just ask the Ten Network.
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After just finished S2 of HOC watching 4/5 at a time (which I paid for as always) when Tim says ““That US content is increasingly available in multiple sources so therefore the value of it is going to decrease”, is of course a no brainer but cinching the flow of the cheap US off casts facilitated by digital will help local content production. It’s the only way our FTA channels will stay relevant. I’m skeptical but can only hope this is the first shovel of dirt that builds the foundation that has the FTA’s thinking like content providers primarily and media companies secondarily – not the other way round.
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