Seven West looks at bigger picture in rule change
Seven West announced on Friday it signed a new affiliation agreement with regional television partner Prime Media. The agreement, stretching through until June 2019, is understood to have increased the rate paid by Prime to rebroadcast Seven's market-leading content.
Seven recently lifted its share of the metro television advertising market to a record 40.5 per cent despite Nine's continued improvement in the ratings, and signs of stabilisation at Ten.
"We are looking forward to building on our leadership in broadcast television and working even more closely with Prime in delivering our content to all Australians," Seven West chief executive Tim Worner said in a statement.
Before the latest round of affiliate agreements, Prime was paying Seven about a third of its television revenue, WIN was paying around the same rate for Nine's signal, and Southern Cross was paying around 30 per cent of its revenue to Ten.
Seven Group Holding's chief executive, Don Voelte, recently played down speculation removal of the reach rule would lead to a merger between Seven West and Prime. Kerry Stokes' Seven Group owns 11 per cent of Prime and 35 per cent of Seven West.
Mr Voelte said the synergies would not justify a deal, although this has not stopped speculation the removal of the reach rule will produce a flurry of deals between Seven's rivals.
Nine has gotten ahead of the game, buying the Channel Nine Perth and Adelaide television stations from its affiliate WIN, and other deals are expected to follow if the reach rule is removed.
Earlier this year, Fairfax Media revealed Nine was planning to dump WIN as its regional affiliate in favour of Southern Cross in a deal that could also have led to a merger of the two companies.
Analysts estimated that such a deal could add $400 million in value for Nine and Southern Cross shareholders if the previous government had succeeded in lifting the reach rules in time.
Television revenues for Southern Cross dropped 13 per cent last year due to its reliance on Ten's poorly performing content.
Southern Cross has said the media group is keeping its options open if the reach rule is scrapped. While the government has backed recommendations from a parliamentary committee to scrap the rule it has not said when this would happen.
Frequently Asked Questions about this Article…
The 'reach rule' limits how much audience a major network can reach and has prevented mergers between metropolitan networks and their regional broadcast partners. Its expected removal could allow mergers and reshape the Australian TV sector, affecting company ownership, advertising power and potential shareholder value.
No. According to the article, Seven West Media signed a new affiliation agreement with Prime Media through June 2019 but there was no merger. Seven Group holdings executives have played down merger speculation, saying the synergies wouldn’t justify a deal.
Seven West signed a renewed affiliation deal with Prime that runs until June 2019. The agreement is reported to have increased the rate Prime pays to rebroadcast Seven’s market‑leading content, which shifts more revenue from the regional partner back to Seven.
Before the latest deals, regional affiliates were paying a significant share of their TV revenue to metropolitan networks: Prime was paying about one‑third of its television revenue to Seven, WIN was paying a similar rate for Nine’s signal, and Southern Cross was paying around 30% to rebroadcast Ten’s content.
Yes. The article notes speculation that scrapping the reach rule could trigger a flurry of deals. Nine has already moved quickly by buying its Perth and Adelaide stations from affiliate WIN, and analysts previously estimated potential merger value if rules had been lifted.
Analysts cited in the article estimated such a deal could have added about $400 million in value for Nine and Southern Cross shareholders if the previous government had lifted the reach rules in time.
The article reports Seven recently lifted its share of the metro television advertising market to a record 40.5%. Nine has been improving ratings and bought Perth and Adelaide stations from WIN. Southern Cross saw television revenues fall about 13% last year, largely because of reliance on Ten’s weak content.
Southern Cross has said it is keeping its options open if the reach rule is scrapped. That suggests the company could consider new affiliation arrangements, asset sales or other strategic moves depending on how rules and market opportunities evolve.
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