Network 10 said Morgan Stanley was “misleading and irresponsible” after the investment firm said that the broadcaster’s poor ratings were helping Nine and Seven in a declining ad market.
“The report by Morgan Stanley, which was published on March 14, 2023 is littered with factually incorrect information and bias with some aspects based on unsupportable assumptions,” a spokeswoman said.
“Network 10 considers the publication of the report and any consequent republication of conclusions in the report to be misleading and irresponsible,” she added.
The report said that despite the metropolitan TV ad market falling by six per cent in the six months to December, Nine reported a three per cent increase in its free-to-air TV revenue.
Andrew McLeod, an equity analyst at Morgan Stanley, said that every percentage point of free-to-air TV audience is worth an extra $34 million in revenue for Nine. He also added that the network was on track to claim 39 per cent of the market this year and that Ten’s poor performance could be a “point of inflection” leading the three-horse broadcasting market to become a duopoly.
He also added that an increase in audience share would have a greater benefit for Seven, as it is more exposed to TV advertising.
“Our thesis is the majority is coming from rival Ten (rather than [Seven West Media]),” wrote McLeod of Nine’s improved performance.
“To be clear, [Nine] is not winning sufficient share to be immune from the current TV ad market weakness. But it helps. And when ad markets do recover, we expect [Nine], working from higher share will be in a good position to deliver a significant rebound in earnings.”
Ten has strongly disputed Morgan Stanley’s figures that showed it had 19.4 per cent of the audience share since the turn of the year, compared to 27.5 per cent in 2008.
Ten’s share of the advertising market has declined from around 30 per cent in 2007 to 23.8 per cent in 2022.
Morgan Stanley said that Ten’s declining fortunes were the result of three factors. The first is that it has had no top-tier sport over the past decade, save for the Big Bash cricket league and some Rugby Union. He also said that its highest-profile shows, such as The Bachelor have underperformed compared to those on rival networks.
Changes in strategy and ownership were also given as a reason. Ten went into voluntary administration and has been rebranded multiple times within the last decade. This “may also have contributed to its underperformance,” added McLeod.
Third, the cycle of lower audience figures has led Ten to have a smaller scale, making it harder to compete for sports and key entertainment deals. There has also been a huge increase in competition for younger viewers from streaming platforms and alternative non-linear TV.
“At the same time Ten’s audiences are falling, advertisers also have an increasingly long list of substitute media platforms that can facilitate them reaching the traditional Ten youth audience,” he wrote.
There was a silver lining, though. McLeod said Ten could reverse the shift given that it is owned by Paramount whose pockets are very deep.
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