Seven West looks at bigger picture in rule change
Seven West Media has become the last commercial television network to agree to terms with its regional affiliate before the expected removal of the "reach rule" that would allow mergers between the major networks and their respective broadcast partners.
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.