Gyngell slams Government over stalled media reforms, no merger with Fairfax while it is in print


Gyngell during today’s investor call

CEO of Nine Entertainment Co David Gyngell has admitted the company is frustrated by the stalling of media reform and has declared he has no interest in a merger with Fairfax Media while it still has major print assets.

During an investor call on today’s end of year results today Gyngell also questioned the logic of a much-speculated tie up in video streaming between Seven West Media and Foxtel, saying such a deal would “destroy some value” in the pay-TV operator’s business.

His comments on media reform come a week after Communications Minister Malcolm Turnbull admitted there would be no changes to the laws on media ownership, including rules limiting companies to owning just two of either print, TV or radio assets in one market, until there was greater consensus between executives from the major companies.

“You never know. You go in on the day and they say they are going to change it,” said Gyngell. “But you are still 50/50. With the rhetoric going on at the moment nothing seems to be getting through. I don’t know what the priorities are for the media reforms, but it could be an embarrassment if they don’t get through.”

Gyngell also warned failure to change the ’75 per cent reach rule’, which bans media owners from reaching more than three quarters of the population in any state, would lead to “those businesses being destroyed over time”.

Nine has been a strong proponent of a reform to the reach rule in the hope that it would allow them to merge with regional players such as Southern Cross Austereo (SCA). Whilst most major media players are keen for the changes, rival Seven West Media has voiced its opposition to them.

He added: “As our costs go up they are not going to be able to compete, they are going to deliver worse content to regional Australia and that’s not what people deserve.

“The National Party will be coming to the government in five years begging for them to change these rules. Not standing in hindrance, not to allow people to get the right information in those markets.”

The Nine boss said the economics were such that regional players such as SCA and WIN would be increasingly financially squeezed and therefore the onus was on the government to look at reform.

“Now Australia has a got a middle man attitude here,” he said. “It is a middle man business that takes a lot of content from around the world and those people are middle men and they get squeezed when our costs go up, and you have to capture value where you can.

“If those rules don’t change that’s going to be problematic. I respect two out of three being controversial but again those things are going to change as well – how many newspapers will be printed in five or ten years?”

Gyngell also took aim at media reports around yesterday’s announcement that Nine and Fairfax Media would do a joint venture around subscription video on demand (SVOD) service StreamCo rejecting any suggestion the deal is a harbinger for a merger of the two companies.

The TV boss declared he had no interest in Fairfax, following reports in The Australian which suggested Fairfax might want a strategic stake in Nine, with Gyngell saying he had no interest while it still had substantial print assets: “We will not be print. If it is printed we are not going near it.

“On my watch there will be nothing printed. If they want to buy our company for a big premium then ok but I’m not running anything that is printed.”

Gyngell opened up around the strategy involved in the SVOD business arguing the market could be as high 4m consumers by 2020.

“(Fairfax) also come to the table with money that helps us do something the right way. We are going to have to do a very good job of this, this is a very tough space. This isn’t a space that just because you have a television licence you can just go do it,” he said.

“We believe you have to move fast, you are aggressive and have good content pipelines. There will be two to three players in this space.

“People want to buy this. I believe between now and 2020 there will be between three and four million people subscribing to these services. So are we good enough to be in the top two or three in this country? Hopefully we are and then we have a business which makes some money.”

Nine’s CEO said consumer habits were already changing towards catch up services and that the TV network needed to be ahead of the curve.

“The easy way out would be for Channel Nine to spend $50m on some more content and drive the revenue and drive the share up. That’s not going to be good for our business in the long term because this is coming,” Gyngell told the investor call.

“You already see it in viewing habits past 8.30-9pm at night when people are doing all their catch up, they can’t find anything they’d like to watch and they’re doing their watching of stuff they recorded over the weekend. That’s when they start watching and what we are trying to be is a full service TV business.”

Gyngell also questioned the logic of a speculated deal between Seven West Media and Foxtel for a streaming collaboration, adding: “Foxtel has an amazing business. They just made a billion dollars… but I don’t believe that Foxtel would have the same ambitions that we (as a free-to-air TV network) would.

“I don’t understand why they would think this is an opportunity to cut everyone in. I’ll be interested to see, and maybe surprised, to what degree of content they invest with their partners in that space.

“This isn’t a space where you have to be a television business to do it… by and large it is the device which gives the punter the access to large reams of content that they would be prepared to pay a certain price for, when they want to watch it, at a convenient time.

“To think that Seven, Nine and Ten are the only one who could do it would be naive.”

Nic Christensen  

(Declaration of interest: Nine are currently advertising on this website.) 


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