Is Ten the Biggest Loser?

Can Australia's economy support three commercial free-to-air television networks?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Nine Entertainment boss David Gyngell says Australia can only support two profitable free-to-air commercial television networks, as costs rise and digital competition intensifies.

As we've suggested several times here at the Motley Fool, free-to-air TV networks are facing increased competition from other delivery channels such as pay TV, digital media and the internet. Advertisers, in the never ending quest to capture more eyeballs, are following where consumers are going, which is increasingly away from free-to-air television.

Online advertising is set to overtake television as the largest advertising category this year, as free-to-air advertising falling, with consumers faced with multiple choices for their entertainment time, including digital TV, pay TV – Foxtel, jointly owned by Telstra Corporation (ASX:TLS) and News Corporation (ASX:NNC) as well as online sources.

Mr Gyngell has told the Australian Financial Review that the rising cost of programming and the need for broadcasters to invest in local content made it much more difficult for the industry to sustain three free-to-air commercial stations. Seven West Media (ASX:SWM) holds the lion's share of the advertising market with over 40%, closely followed by Nine with around 38%. Ten Network Holdings (ASX:TEN) significantly lags behind both with less than 20% of the advertising market.

In an effort to take market share from its rivals, Ten has been offering huge sums of cash to gain broadcasting rights to prime sports events such as cricket, but ended up with the just the domestic Big Bash League, while Nine continued its coverage of international cricket.

The problem with stumping up large bids for events is being able to generate a profitable return, mainly through sales of advertising. But as costs rise, and advertising revenues diminish, it makes it that much harder for the free-to-air broadcasters to generate a profitable return on their investment.

Foolish takeaway

Bigger economies like France and Germany have just two free-to-air networks, and Australia could be headed down the same path. Unless Ten can pull a rabbit out of its hat, Seven and Nine look set to continue their dominance, leaving Ten in a precarious position.

In the market for high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool writer/analyst Mike King owns shares in Telstra.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »