Business

Tough times loom for TV after ad sugar hit

The TV industry is expected to record "pretty challenging" results this earnings period. (AAP)

Morningstar analyst Brian Han expects the TV industry to record "pretty challenging" results this earnings period, despite a lift in the advertising market.

Advertising from the same sex marriage debate and the Queensland election has breathed temporary life back into the television advertising market but the headwinds for the industry haven't disappeared, a media analyst has warned.

Morningstar analyst Brian Han says free-to-air ad revenue increased across the board in the December half - thanks to the contribution of several one-off events.

He expects the current June half to be similar, with the Winter Olympics and Commonwealth Games set to give broadcasters an earnings lift the months ahead.

But he said, the modest ad market improvement will not last long and ongoing cost pressures from digital media competition and new shows will continue to hurt the Australian television industry.

"I think generally it will still be a pretty challenging set of results for everybody," Mr Han told AAP ahead of February's earning season.

"The headwinds for traditional media will continue because obviously we have eyeballs migrating to digital media still and advertising is also still consistently flowing into digital media platforms."

Nine Entertainment and Seven West Media are both slated to release financial results in February, while Ten Network ended its near-two decade spell as a publicly listed company last year.

In November, Seven announced plans to make $25 million worth of job cuts over 12 months in response to falling ad revenues and a highly competitive TV market.

Chief executive Tim Worner said Seven would adjust its cost base to recognise competitive headwinds, disruption from global players, increasing content costs and consequent financial pressure across the company.

Rival broadcaster, Nine Entertainment said around the same time that the ad market for the first half of 2017/18 was at the upper end of previous earnings guidance but, in August, the network said the total television advertising market had declined 2.7 per cent during 2016/17.

Mr Han said a focus on premium content across the board would be crucial in the 2018 financial year to combat demand for digital channels such as Netflix and Stan.

"They have to do it," he said.

"To just sit still and do what you have been doing historically for the past 30 years - the consequences are unthinkable."

Mr Han expects the battle for ratings to be "as intense as ever" this year with the Ten Network, revitalised following the takeover by US media giant CBS, back in the ring.

He said how the networks manage their non-programming costs will determine their performance.

Stay up to date with SBS NEWS

  • App
  • Subscribe
  • Follow
  • Listen
  • Watch