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Voice backers face $3m bill as Nine plays tough
BY: LARA SINCLAIR, DARREN DAVIDSON From: The Australian September 03, 2012 12:00AM
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DESPITE one of the most volatile negotiation periods in 30 years for the $12 billion free-to-air television market, the Nine Network is expected to double the asking price to sponsor hit singing show The Voice to more than $3 million as it heads into preliminary discussions for next year.

Flushed with Olympics success, Nine is set to be the first network to open serious discussions with the big media buying groups that are responsible for booking about 85 per cent of the networks' revenues, given increases in key audience demographics for the year to date.

But the television market is flat and booking times are very short, giving the networks little visibility into planned advertiser spending, and traditional media is in something of a slump while digital media continues to grow.

There is little hope for an increase in the rate advertisers will pay to reach a thousand viewers (CPM) for any network, but Nine is expected to ask for a share increase and Seven will use its cross-platform strength and muscle as the No 1 network in total people to argue for more share at the expense of the struggling Ten Network.


"Ultimately the pricing's dictated by how you're performing in ratings and demand," Seven's chief sales and digital officer, Kurt Burnette, said.

"We're performing well in ratings and we're getting some good demand. We would expect the pricing to be in line with that."

But Peter Gammell, chief executive of Seven Group Holding, which owns 32.5 per cent of Seven West Media, said he wanted Nine and Ten to be "healthy".

The Seven West board member said the problems of Seven's competitors, which he did not name, were "unfortunate". "They know what their problems are, whether they be financing or ratings, and how they solve those problems will be important. Because to us we actually want them to be healthy. It's very destabilising for the industry to have a level of uncertainty and there's clearly a level of uncertainty within them."

Mr Gammell said the digital TV multichannel allowed Seven to program its channels on a complementary basis to attract large audiences. "The advertisers still want to go there. That business is still healthy."

Conversely, the Ten Network was experiencing its worst ratings in three decades.

"Pretty much every agency and every client have got massive under-delivery issues," said a source. "(Ten) is not going to be in any position to make good on that, let alone maintain a flat rate position."

Multi Channel Network, which sells advertising on Foxtel, says pay-TV now regularly outrates Ten. "We don't (get more money than Ten)," chief executive Anthony Fitzgerald said.

"We will definitely go for an increase that is in line with our audience growth of 4 to 5 per cent on the core demographics."

But media buyers said while they would push for a lower CPM from Ten, poor ratings did not mean they would walk away from the network. "We want Ten to survive," one buyer said. "If they don't, Seven and Nine will go nuts and they'll gouge us."

The networks typically begin rate negotiations in September but the usual early starter, Seven, is in no hurry as it waits for Nine's Olympic ratings glow to fade.

On the other hand, there are debt covenant complications hanging over Nine's parent company, Nine Entertainment Co, and it is likely to be keen to demonstrate buyer confidence and secure revenue.

"Nine will be keen to start negotiations early," one buyer told Media. "They know what their schedule's going to be. They've got two series of The Block, The Voice, Ashes cricket, another Underbelly, Big Brother. They've got a schedule that works. It's like the old days - very consistent."

The breakout hit of the year, The Voice, had few sponsors when unproven, but the buyer said Nine would be able to capitalise on its success next year. "They'll want to monetise it because they were unable to do it last year," the buyer said. "They'll be asking for $3.5m to $4m."