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Is there light at the end of the tunnel for Australian TV?

Is There Light at the End of the Tunnel For Australian TV?

So what's new in Australian television? Hope. Something that was missing a few months ago. Most people agree that financiers with their ready credit, buy-now pay-later attitude, not only inflated their TV market, but encouraged the wrong people into the broadcast business. Banks now own two TV networks: the Seven and the Ten. Both networks are in receivership soon hoped to be sold to the highest bidder. Only hope remains since there is a looming rumor that the banks themselves may run the networks.

The Nine Network is now solidy in the hands of Kerry Packer who last August regained 60 per cent ownership for A$300 million, after its new owner Alan Bond defaulted on a A$160 million final payment to Packer. In 1987 Bond purchased the Nine Network from Packer for A$1 billion. In the same year, Rupert Murdoch sold his Ten Network to real estate mogul Frank Lowy for some A$850 million, and producer Christopher Skase paid A$780 million to the Fairfax Group for the Seven Network. Earlier in that year, Fairfax purchased for the Seven Network a TV station in Melbourne for A$300 million. The following year, in 1988, Skase bought two additional TV stations, one in Perth and one in Adelaide for a total of A$126 million. The Seven is now Australia's only TV network with five owned-and-operated capital city stations.

Despite harsh time, the Seven has done well, earning A$30 million before its interest expenses (Seven owes A$600 million to 10 banks, putting the interests at about A$100 million per year). Nevertheless, what by 1988 cost Skase A$906 million, is now valued at A$450 million. With A$477 million owed to two banks, the Ten is now worth an estimated A$200 million, while the Nine, which lost A$618 million is, in the words of Packer "with no money."

Indeed, while total TV revenues are set at A$1.3 billion, the cumulative debt for the three networks is A$1.5 billion. The ad pie is thus divided: 44 per cent to the Nine, 34 per cent to the Seven, and 22 per cent to the Ten.

Cost cutting is now the universal M.O. Since the problem started, 650 employees were eliminated at the Seven, 814 people at the Ten and 190 at the Nine.

By firing the last group of 300 last month, the Ten is implementing a A$100 million savings for 1991. Further savings is coming from renegotiating program imports, now set at A$60 million and reduction of license fees for domestic production (fee for a one-hour soap is now A$150,000).

Meanwhile, a shortage of funds has forced ABC, the non-commercial network, to seek help from state governments to save its educational TV service. ABC now faces a A$75 million shortfall. On other fronts, pay-TV could be introduced as early as 1992, while the diary system is being replaced by the A.C. Nielsen's Peoplemeters. The downturn in the television and advertising industry has also been affecting the theatrical distribution.

The Hoyts Corporation, one of Australia's major theatrical distributors, is now addressing "serious" decline in its profits. Peter Ivany, Hoyts' CEO was "unavailable" to comment for this story.

However, the movie business could be the only bright spot in this dim picture. According to the Motion Pictures Distribution Association, last year there was a 12.5 per cent increase in the number of movie screens and a 13 per cent increase in people going to the movies. In 1991, some 45 million people are expected to see films at theaters.

The year, full of changes for Australia's film-TV business, culminated with the arrest (and release on bail) of Alan Bond for concealing information; the disappearing act of Messrs. Steve Cossner (the studio head who tried to save Lowy's Ten with a cash infusion), Frank Lowy and Christopher Skase. Entering the picture are developer Hudson Conway, producer Reg Grundy and distributor Bruce Gordon bidding for the Seven Network. Gordon's bid, however, was not formalized. The Ten Network is making its largest creditor Westpac, a virtual broadcaster since no bid is in for the network. This time, in the view of many observers, what may change the whole picture of Australian TV is the omnipresent power of Kerry Packer, which is not limited to the Nine.

According to newspaper and other accounts, Packer's major bank is one of the two banks which now own the Ten Network. Recently, the Trade Practices Commission (TPC) questioned Packer's meeting with Ten Network officials. The TPC also warned the Ten not to have Malcolm Turnbull involved in its operations. Turnbull is a former director of the Nine Network and a former general counsel to Packer's Consolidated Press group. In addition, Hudson Conway, the contender for the Seven is partially owned by Packer.

Table : The Output Deals Picture in Australia
7 Net 9 Net 10 Net Shared
Lorimar MTM MCA Viacom
MGM/UA CBS 20th C. Fox (9Net/7Net)
Disney ABC Worldvision Saban
NBC Columbia CNN (9Net/7Net)
ITC Warner Bros. Carolco
ACI (9Net/7Net)
Hearst Orion
WIN (7Net/10 N.)
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Australia
Publication:Video Age International
Date:Jan 1, 1991
Previous Article:Reflective Australia asks outsiders' advice for rebuilding TV industry.
Next Article:In Australia, the medium is the mess age.

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