PwC Report Paints Grim Future For Newspapers & TV As Ad Dollars Set To Plummet

PwC Report Paints Grim Future For Newspapers & TV As Ad Dollars Set To Plummet
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A new report by PricewaterhouseCoopers (PwC) has predicted that traditional media in Australia such as newspapers and free-to-air TV could lose as much as $1.6 billion in ad dollars over the coming four years.

The report, titled Australian Entertainment & Media Outlook, said newspapers would lose $850 million in revenues by 2021 – down from $2.2 billion annually now to $1.4 billion – as publisher’s digital offerings fail to offset the decline in print.

However, if there was any good news for the likes of Fairfax and News Corp, the report predicted that circulation revenues – bolstered by subscription increases, more paywalls and new offerings – would grow by 1.7 per cent to $1.4 billion in 2021.

It predicts the likes of Google and Facebook will continue to dominate internet advertising, however, traditional publishers will be able to fight back as investments in the digital space continue to pay off and demand for online video increases.

The report predicted online video advertising will grow from $766 million in 2016 to $2.2 billion in four years time.

And the news was even bleaker for Seven, Nine and Ten, the PwC report found the TV ad market would retract 4.7 per cent over the next four years wiping nearly $800 million off the broadcaster’s bottom lines.

This, as many have predicted, has the potential for the three free-to-air players to turn on one another as they fight for whatever ad dollars remain.

And with media ownership laws set to go before the senate, the report’s author, PwC’s entertainment and media industry leader Megan Brownlow, said traditional media companies would need to become “frenemies” and create content as a group rather than go it alone.

“Across Australia’s media and entertainment industry, we continue to see a strong divergence in traditional and digital media spend. The story has been the same for a number of years now,” Brownlow said.

“Instead of entrenching the dichotomy between traditional and digital players, this trend is forcing companies to take a different approach and has led to blurring of business functions, business models and of industries.”

“Old-school thinking will need to change as collaborating with rivals becomes the norm. Negotiation is cheaper and more effective than combat. The way to grow in this environment is to identify gaps in the customer experience and collaborate or partner with a competitor or technology provider to address this gap,” Brownlow said.

The report found that consumer and advertising spending slowed significantly to 2.1 per cent in 2016, down from 6.4 per cent the previous year.

It predicted the media sector would grow in value to $43.7 billion by 2021, at an annual growth rate of 2.1 per cent, far below last year’s prediction of 4.1 per cent a year.

The findings of the PwC report will only fuel calls for the media reforms to be passed by the senate. The new reforms would allow the media players to be open to merger opportunities and take the fight to Google and Facebook rather than squabble amongst themselves.

 

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