Ten’s administration a body blow to media confidence but may have a silver lining
The move to place the Ten Network in administration will sap some of the confidence out of an already shaky advertising market, with the network expected to be on the receiving end of some tough negotiating tactics from media buyers keen to capitalise on its weakened position.
However, the move could also have a silver lining for the network with some agency bosses predicting a leaner Ten will be better suited to navigating the fast-changing digital world.
Ten was placed in administration on Wednesday after months of seeing its share price pulverised on the stock market.
Administrators Korda Mentha are now working with network executives on the way forward with the network’s “transformation plan” predicted to save $50m per annum by the 2018 financial year and $80m by 2019.
Omnicom CEO Peter Horgan said there was little doubt agencies would try and make the most of the situation on behalf of their clients.
“I think there is a natural tension when you are transacting with other people’s money,” Horgan said.
“But having said that, agencies and marketers alike prefer a strong Ten.”
Peter Horgan believes administration could lead to a more agile network
Horgan said that driving the best deal for clients would remain a priority for agencies, but even with the profound changes taking place across the media landscape, the network was only one or two hit shows away from being an advertisers’ darling again, enabling it to charge a premium for its airtime.
One media strategist with a major agency said networks going into administration always caused challenges for the market.
“It’s a distraction and we have been in this situation before, said the strategist who asked not to be named.
“Not that long ago Nine almost went into administration in 2012 and Ten went into receivership in 1990. It certainly doesn’t help broader confidence in TV in general, but I don’t think the impact will be long term.
“Tactically the other networks are going to use this to their advantage and try and squeeze more share out of the market. But Ten will also work to use their position to an advantage.
“Ultimately, from our perspective the network is not switching off and audiences are not going away.”
Simon Rutherford says Australia needs a strong third network
Simon Rutherford, CEO of independent media agency Slingshot, said the initial reaction to a network going into administration was for people to think the worst.
“I hope the market doesn’t react based on fear,” Rutherford said.
“We need a third network and we need a strong third network so people should not make short-term decisions.”
While some said the move could be a blow to confidence, Mark Coad, CEO pf PHD, said the impact may not be as significant some expect.
“I think both Ten and MCN are doing their finest to reassure the market,” Coad said.
“They are going to trade as usual for the rest of the year.”
Mark Coad doubts there will be a significant impact in Ten’s move
He said while the situation beyond the end of the year remained fluid – particularly in terms of 2018 programming decisions – there may be opportunities for cheaper deals to be done as Ten sought to bolster cash flow.
However he did not expect any flight of advertisers from the network that would spark wholescale rate cuts.
“We want a competitive market with three competitive, profitable networks,” he said.
At the same time he said the network was one show away from turning the tide and that it did not necessarily mean a massively expensive program.
“There are plenty of successful shows that cost $100,000 an hour to make,” Coad said.
Horgan said said there was an irony in the network being placed into administration as it could emerge at the other end leaner and more agile than its rivals and more able to deal with the dynamics of the media landscape.
“By going early [into administration] and not dragging this out they may have helped themselves,” Horgan said.
Rutherford agreed it was a huge opportunity for the network.
“It was almost inevitable they would have to restructure and come out the other side without this ball and chain of the global programming deals around their neck.”
“I think what will come out the other end will be a transformed Channel Ten. They have set the trigger for change.”
There is no irony in TEN going into voluntary administration in the hope of emerging rejuvenated. That is the whole point of voluntary administration.
The irony would lie in the opposite scenario: the company goes into voluntary administration in order to save itself and only succeeds in hastening its demise.
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“There are plenty of successful shows that cost $100,000 an hour to make,” Coad said.
Name them.
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A 10 insider said that The Project should not be primetime but moves to change were halted ! Paul
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As a Network Ten Shareholder and former Media Agency Director it’s difficult not to be suspicious of the conflict of interests at play of Lachlan Murdoch and Bruce Gordon and their attempt to put Ten in to Voluntary Administration. Both have interests to wipe out shareholders and privatise the company for their own benefit. NewsCorp would also benefit from a relaxation of the 2 out of 3 and 75% reach rules and are also not impartial as majority owners of 21st Century Fox and CBS who supply content. The 3 day trading holt has rendered my $20k investment not only worthless but also inaccessible and as a shareholder I will support ASIC in a full investigation
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OK Mr. Coad.
Let’s make it easier. Just name one.
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