Ten must shake off the Mad Men era

Experienced names in the media business might not be enough to fight against an underlying shift away from traditional media consumption. Today’s share price slip of over 3 per cent confirms Ten Network Holdings Limited’s much anticipated turnaround is taking longer than investors budgeted for. 

This isn’t just a Facebook phenomenon. Media forecaster Zenith anticipates the internet will be the fastest growing advertising medium through to 2015, growing at an average rate of 16 per cent. Online video and social ads are to be the leaders.

Ten's results this morning confirm the business models used for traditional media, as already discovered by print, are no longer profitable in a digital world. Consequently revenue finished up a miserable 13 per cent lower than the previous year for Ten.

Broadcast media is struggling as the consumer move to an online world becomes more entrenched. Traditional broadcast media risks becoming obsolete unless a profitable way to leverage online consumption is found.

The reach and power of social media expands far beyond just Facebook. There is Twitter and photo-sharing platform Instagram (also owned by Facebook), which now offer brands an alternative channel to connect with their target audience and enhance their profile. It can also be much more cost effective than putting together expensive advertisements.

Ten has a digital offering in ‘tenplay’, which was released at the end of last month as part of its ‘TV everywhere’ strategy. The only comment chief executive officer Hamish McLennan offered so far was ‘tenplay has recorded strong numbers since its launch.' 

Falling advertising revenues is one of the problems at Ten. But someone is getting the ad spend. According to data compiled by Bloomberg, television advertising revenues have grown at a 3.8 per cent compound annual growth rate over the past 10 years. This is definitely not reflected in Ten’s share price, which has fallen 85 per cent since 2010 highs.

With television viewers now able to stream television shows online for free, there is less reason for consumers to tune in to prime time broadcasts like once before. Ten, along with other broadcasters, need to find a convincing way to boost advertising and gain a presence in the online world.