Who will win the post-linear spoils when the transmitters turn off?

BY Tim Burrowes

November 23, 2023 9:50

Welcome to an end-of-week update from Unmade. Today: How the TV and radio industry are locked in crucial battles for what happens when the transmitters turn off

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In TV and audio, the fight for the post-linear media consumer is under way

Tim Burrowes writes:

The media industry in full lobbying mode elicits mixed feelings.

It’s an impressive sight. They’re very good at it.

But at the same time it all feels so… undignified. It is, after all, inherently self serving with each side presenting their arguments as aligned with consumers’ interests.

There’s a lot of lobbying underway.

The free to air TV networks are fighting on multiple fronts. There’s the proposed imposition of spending quotas on the streamers (which they fear will drive up their own costs). Then there’s the push to limit betting ads (there’s more on communications minister Michelle Rowland’s curious warmth to the gambling companies in today’s Rear Window).

Loudest this week is the battle for prominence of their apps on smart TVs. Industry body Free TV has launched a campaign site arguing for laws to force manufacturers to install the free-to-air players’ streaming apps in the most prominent positions on the home screen.

Free TV wants to rally the public against big tech

Meanwhile subscription body ASTRA, mainly funded by Foxtel, is arguing this amounts to government-mandated viewing.

Foxtel and co wants to rally the public against the government

These propaganda salvos represent the final moves before Communications Minister Michelle Rowland tables her media law reforms in Parliament. In theory it will happen this site of Christmas although that’s starting to look questionable. Media law reforms always, always get delayed.

The longer a government can keep those sort of reforms in limbo, the longer they can avoid angering players with the power to influence voters at 6pm every night. And while the Sword of Damocles dangles over the head of a whole industry, it keeps everybody in line.

For the local media companies, the stakes are as high as they’ve ever been.

While prominence is an esoteric topic to try to capture the interest of the public, it’s strategically crucial to the local TV players.

There will come a time when the transmitters are switched off.

Unmade on the move away from linear TV:

When that occurs, the main commercial channels will no longer be in a three-way market, but one with dozens of serious competitors. Broadcasting licences once made for excellent moats.

Getting content discovered in an all-streaming environment is a far, far greater challenge.

Anyone who has set up a smart TV recently will be aware of just how big a process that can be.

While the home screen be personalised, I suspect that many consumers leave it in its default state.

The simple act of logging in to each of the streaming services already on the page by default, and perhaps reordering them by preference, is enough of a chore.

Finding other apps is far more laborious, with the consumer forced to navigate to the app store and use their pointer to slowly type in the name of each app, download it, and then go through an additional couple of steps to then get it onto the home screen.

Four months after buying it, I finally switched on and set up my Samsung TV over the weekend – I’d been putting it off because I knew it would be a pain. It took me more than two hours to download and log in to every app and to order them in priority I was likely to use them.

The question for the likes of 9Now, 7+ and 10play is whether every viewer bothers to do that. In the linear world, a large proportion of viewing comes from people who simply decide to watch TV and then opt for whatever’s on, rather than make an appointment to view.

Unmade on Samsung’s marketing funnel:

If AFL’s not their sport, what would be compelling enough on 7+ for the average consumer? Particularly when Samsung – and many of the other manufacturers – make plenty of other free streaming options more easily available via its FAST (free ad supported TV) channels. Ditto for Nine and NRL.

That’s why the likes of Netflix and Foxtel group are willing to pay TV manufacturers for the privilege of appearing on that first page.

A strong argument is that if the free-to-air networks want their apps to be higher, then they should pay for it. That’s capitalism.

Mainly based on the public service argument around their commitment to providing news, the networks argue they are a special case and should occupy the first five slots (or six if you include the live TV button).

How Free TV wants the home screen to look

They may even win the debate – Free TV has a track record of winning these battles. But if so, Michelle Rowland should extract a cost: The right to the home screen should enshrine in law all the obligations to news and content quotas that are currently a broadcasting licence condition.

This is not the only battle for the post-linear broadcast world playing out.

ARN Media’s proposed takeover, alongside Anchorage Capital Partners, of Southern Cross Austereo will directly influence the post-linear future of the audio industry.

While the two companies’ broadcast licenses would need to be split between ARN and ACP to stay within the law, all the streaming assets will move into a single audio streaming company.

At the point when the radio transmitters are turned off – as they inevitably will be, one day – that company will dominate Australia’s audio landscape.

It all seems distant and theoretical, but the moves being played out right now will define the shape of Australia’s media industry for decades to come.

Unmade Index sinks as SCA takeover takes another turn

Seja Al Zaidi and Tim Burrowes write:

The Unmade Index took a further 0.91% drop on Thursday, landing at 592.7 points.

ARN had the steepest drop of 3.16%. It came after The Takeovers Panel ruled that “unacceptable circumstances” had occurred in ARN’s takeover bid for SCA. The somewhat technical contravention involved investment house Allan Gray which already owned just over 20% of both SCA and ARN.

The Takeovers Panel ruled that the bid saw Allan Gray’s voting power over SCA effectively jump to more than 30%. “Creep” legislation means that a shareholder with more than 19% of a company can only increase their holding by up to 3% every six months except through a takeover offer.

The panel is yet to rule on what actions should be taken over Allan Gray’s shares.

The complaint to the panel came from Keybridge Capital, of which Australian Community Media proprietor Antony Catalano is a director. Catalano’s own bid to merge ACM’s regional newspaper assets with SCA was knocked back last week.

Elsewhere on the Index, Enero Group lost 2.58%, Seven West Media fell 2.13%, Domain 1.42%, Nine 0.78% and Ooh Media 0.72%.

The only stocks to rise were Aspermont Limited – which rose 20% – The Market Ltd at 5.36% and Southern Cross Austereo at 0.49%.