Pay TV sceptic eats his estimates JULIAN LEE April 2, 2010
A LEADING sceptic of the pay TV industry's future as an advertising medium has been forced to revise his forecast for the medium in the face of a resurgent TV ad market.
The regional chief of media agency Universal McCann, Henry Tajer, is revisiting his forecast for pay TV ad revenue after earlier predicting it would shrink by 2.1 per cent this year.
''We are going to have to revise it [the entire TV market] up at least to 5 maybe 5.5 per cent for metro and regional markets and that's going to have a positive effect on pay TV,'' said Mr Tajer, whose clients include two of the nation's largest ad spenders, Wesfarmers and the federal government.
Mr Tajer would not be pinned down to a pay TV forecast, saying his agency was still working through the figures.
''It could get into the positive, but I can't say at the moment," he said.
Earlier this year, Mr Tajer said Universal was the first agency to predict pay TV ad revenue would decline this year. He has also had to fend off claims he is biased against pay TV because one of his clients is Ten's digital sports channel, One HD.
Despite the revenue revision, Mr Tajer said free-to-air digital channels such as GO!, 7Two and One HD, which were launched last year, were capturing 9.7 per cent of TV audiences and provided a more efficient alternative to pay TV.
''In some cases the reach we deliver through the multichannels is much more efficient and timely than what we would do on pay TV,'' he said.
''You are getting one [digital free-to-air] channel aggregating an audience that it would take 12 [pay TV] channels to deliver those reach levels. The maths stack up for multichannels.''
Another analyst, Steve Allen of Fusion Strategy, has gone further, predicting pay TV will reach a high-water mark in revenue and audience as free-to-air digital channels stymie the growth of pay TV subscriptions.
''On all three measures - subscription, audience and revenue - this is the year they will reach a peak,'' he said. ''There's a head of steam building up against them. We think their audience will halve and their [ad] growth rate will halve.''
Pay and free-to-air TV camps are claiming the launch of digital free-to-air channels is benefiting them; pay TV says its audience is rising and that the multichannels are cannibalising their free-to-air main channels - a fact the TV networks acknowledge.
Meanwhile, the free-to-air industry says the multichannels are impeding take-up of pay TV and say that because the audience measurement panel has changed, comparisons between this year and last cannot be made.
Even some within the pay TV industry admit that the days of 12 per cent growth each year of the previous few years are over; last week it was reported that the industry grew by 4.9 per cent, albeit in a market that declined by 8 per cent.
Anthony Fitzgerald, chief executive of Foxtel's sales arm, MCN, declined to comment but Brian Gallagher, CEO of Full Circle, the ad sales house for 15 smaller pay channels, said growth levels of the past were over. "But I still think there's plenty of upside,'' he said.
