What the axing of Wake Up says about Ten’s plight

tim burrowes landscapeWake Up ended this morning and Ten is slashing its news staffing. Until it finds a new owner, the network has no option but to cut costs radically, argues Mumbrella’s Tim Burrowes

It comes as little surprise that Ten has axed Wake Up.

But nonetheless, the decision – and the lack of local content to replace it – suggests that Ten is running out of choices.

Primetime isn’t working, mid mornings are a struggle and breakfast time has failed. (With the caveat that at least the new series of Masterchef has held up so far.)

The only obvious route it has left now is to cut costs again and attempt to be profitable as a distant third placed network until the ownership situation changes.

But before we get to that – a thought on Wake Up. The failure of the show is not about the content. It’s in large part about the inability of the network to successfully persuade people to sample it.

wake up natarsha belling tears

Today’s tearful goodbye

Personally, I really liked it (slight declaration of interest: I was a guest on Wednesday morning. Just 47,000 metro viewers watched.). It was the one we tended to have on in the office most mornings. James Mathison is fast and funny, and Natarsha Belling discreetly provided the backbone with interviews.

And for me, Sam Mac was a breakout star – even if it started to look like he was taking part in an extended metaphor for the problems of the network when he attempted to take a water taxi from Manly to Pyrmont with Ita Buttrose and and broke down live on air.

The word from inside was that he was also a rarity in the TV industry – somebody in it for the right reasons and pleasant to deal with.

In many ways, the hacking of the network’s news capabilities say a lot more than dropping Wake Up which was probably never going to start rating. Ten’s ambitions, for now at least, seem to be little more than mainly national news, with a handful of local stories, all read by local faces.

That looks like part of a cycle where cost cuts lead to a further drop in ratings, which will in turn trigger further cost cuts.

The news cuts remind me of the cycle faced by newspapers around the world over the last decade. You take out the reporters and subs, and the lower costs help you hit the next quarter’s profit numbers. But then readers fall away because the quality has fallen and more cuts have to follow as the advertisers retreat.

Ten logoThe sense in the industry at the moment is that Ten is currently in a holding pattern. Talk to media agency CEOs – and I’ve spoken to more than one on this topic – and Ten is fast becoming irrelevant to them.

That’s the biggest problem. For a long time, the market would support the third network to keep the dominant players of Seven and Nine on their toes. But numbers are now getting so poor – that it gets difficult to justify this to clients. Most weeks now, the main channel is getting a peak share of less than 10 per cent of the free-to-air audience.

Last week thanks to the return of Masterchef, it managed a still paltry 11.9 per cent. Even with One and Eleven it still only totalled 17.3.

The drums are also beating in the production sector. Ten doesn’t seem to be commissioning shows at the moment. This only increases the speculation of some sort of future tie-in with Foxtel which has also gone quiet on this front.

There was enough speculation last year that Ten was in talks for its sales to be outsourced to Foxtel’s sales house MCN to give it some weight. MCN CEO Anthony Fitzgerald is well respected in the industry and a former sales director of Seven.

Last night I was at News Corp’s Come Together presentation (good show, by the way) at the Star Event Centre. As a group of us looked around, somebody nominated Fitzy as the man who might become the most powerful person in the room.

Over the last few months there has been much speculation that News Corp – 50 per cent owner with Telstra of Foxtel – might acquire Ten. (Or rather reacquire it – Rupert Murdoch gave it up in 1985 when he took US citizenship.)

Even if that doesn’t make sense for News Corp, another thought emerges after developments in the UK in recent weeks.

The UK’s third commercial network has just been sold to US broadcaster Viacom. And BSkyB, whose biggest shareholder is News Corp’s sister company 21st Century Fox, is tipped to run the ad sales.

Given that Viacom just spent $700m on a free to air network in the UK, would it be interested in doing the same here, if the soon-to-change ownership laws allowed? Ten’s current market cap is around $750m… and it looks like MCN would be up for the sales role – Fitzy was spotted chatting closely with Ten CEO Hamish McLennan last night.

In the meantime, holding pattern it is. The $200m loan Ten negotiated late last year is starting to look more like it’s going to be needed simply to prop up the company rather than investing in premium sports content and programming. By February, $55m had already been drawn down. We”ll know more in its next market update in a couple of months on how much of that is left.

The numbers are going against the network. Particularly stark is the advertising share between the big three networks. In the space of four years, Ten went from a 30 per cent share to around 20%. (Indeed, Friday’s SMI numbers suggested it has actually now slipped below 20 per cent.)

The stats from Free TV show how Ten’s slice of the free-to-air pie has eroded over the last five years:

  • July – December – 2009 – 30.08%
  • January – June 2010 – 28.88%
  • July – December 2010 – 27.5%
  • January – June 2011 – 28.85%
  • July – December 2011 – 27.03%
  • January – June 2012 – 25.53%
  • July – December 2012 – 21.57%
  • January – June 2013 – 21.9%
  • July- December 2013 – 21.52%

Back in 2009, that half year was worth $431m to Ten in turns of capital city ad revenues. The last half of 2013, this was down to $345m. Stay below 20 per cent revenue share and it’s hard to see any way to be profitable except for more dramatic cutbacks.

Unless something changes, the cycle will get worse. There were days last week when Ten was beaten in some cities by Seven and Nine’s digital channels. Cut programming investment and this will become an more regular occurrence. In which case, why buy ads on Ten at all?



When too does this fall on boss Hamish McLennan? A turnaround takes time. His predecessor James Warburton didn’t get that time. So far McLennan has had 15 months.

Wake Up is McLennan’s responsibility. He brought in Adam Boland as boss of morning TV, and supported the expensive move to Manly for the show.

Which doesn’t mean he did the wrong thing. He had to launch and take a risk. But the more pressing question is whether he has learned enough during his crash course in the TV industry. One insider – albeit, one of the many people who have an axe to grind with the network, told me a few days ago: “He’s learned nothing.”

We shall see. Certainly, there are few who would credit McLennan with an inspiring leadership style. Many argue that’s what you need in a creative business like TV. Look how the extrovert David Leckie saved Seven, and the passionate David Gyngell rescued Nine.

There may be a plan which when it’s emerges, makes sense of the last few months. Winning some major sports rights (and finding the means to pay for them) could yet change the story.

Right now, this feels like a network unable to execute its plan and without much leadership, with the staff desperately waiting for new ownership. The axing of Wake Up is the least of their problems.

  • Tim Burrowes is Mumbrella’s content director

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