It’s safe to say that Seven’s investor day presentation on Wednesday impressed many. The group-wide initiative, which laid out in clear detail the companies strategy to tackle head on a challenging media environment, was especially well received by investors. Since Wednesday, Seven’s share price has increased 15 per cent.
Seven has a knack for telling a good story. Not only on-screen, but off. Ratings-wise the network has been a beast for the better part of the last decade, its competitors scrambling to keep up. And 2013 is no different, Seven started the year with the momentum of the Australian Open and has managed to hold this momentum throughout the year. It has led the market when it comes to the advertising cross-sell across TV, online and magazines – and across the digital multichannels, Yahoo!7 and Pacific Magazines it owns a bunch of brands that are neatly targeting lucrative audience segments such as young males and grocery buyers with children.
Seven’s future growth is based on a few key pillars. One is cost containment through a revamp of the operating model. This makes sense – there is undoubtedly overlap in operational resource across the group, and savings can be made here via a downsizing of the employee base. Secondly, fueling new growth through a redefinition of how it commercialises its audience. In other words, Seven West will be looking at ways it can extract value from its sizeable audience beyond charging companies to place advertising in front of them.
The last pillar is maintaining leadership, and Seven demonstrated this by being on the front foot and presenting this new strategy to investors. Right now, Seven is doing fine. Ratings are stable across primary and secondary channels and it has a strong position in digital and magazines. However, the group realises the media and advertising world is in a constant state of chaos and in order to maintain its position it needs to constantly evolve. By lining up its key leaders and outlining its future plans, Seven appeared prepared and confident to boldly compete in tomorrow’s media environment. At the time of reading it I wondered to myself, ‘how will Nine and Ten respond to this?’
While it wasn’t a direct response to Seven’s public stance, Ten’s programming announcement 24 hours later was telling. Ten excitedly informed the market that it was bringing 11-year-old reality franchise The Bachelor to Australia in a localised version. Seemingly not burnt by the underwhelming performance of Yasmin’s Getting Married, Ten has decided that right now what Australian TV viewers need is a serve of romantic reality programming. Sure, Yasmin’s Getting Married was seven years ago, and we all know that time heals all (or most) wounds, but similar romance based shows have a chequered history in this market. For every Farmer Wants a Wife and Beauty and the Geek there’s multiple Man O Mans, Dating In The Darks and Age of Loves. For the record, it is unclear whether Mark Philippoussis or Yasmin will be called up for the new Bachelor.
In many ways the past week has shown how far Seven is ahead of the likes of Ten. Yes, Ten undoubtedly has more irons in the fire and programming plans than just The Bachelor as well as organisational refinements to improve the businesses position, but it desperately needs to demonstrate to the market some strategic thinking around how it will turn around its performance. Exactly what Seven did on Wednesday – outlining clearly its future growth pillars and key drivers – is what Ten needs to do more than any of the free-to-air broadcasters. Seven has a potent mix of ratings success and confident public strategy. Unfortunately, Ten right now is not showing enough of either.
And it’s this lack of strategy that means a programming announcement like The Bachelor is mocked by many, especially after new chief executive Hamish McLennan told the market that Ten’s recovery “had to be a programming led recovery” and blamed woeful recent performance on past regimes misreading the market and commissioning speculative reality programming such as The Shire and Being Lara Bingle that “dislocated the audience”.
Will The Bachelor work here in Australia? Who knows. As William Goldman says in the Hollywood fly-on-the-wall bio Adventures In The Screen Trade “no one really knows anything”. What we do know, however, is right now Seven continues to increase its lead on its TV rivals.