TV isn't broadcasting impressive numbers
Traditional TV is facing serious challenges from the online piracy. Illustration: Karl Hilzinger
WHILE TV executives watched with interest the final spin of the barrel in the game of Russian roulette between Nine Entertainment's secured creditors, its management and Goldman Sachs over the network's future, they also pored over the ratings of the six-time Emmy award winner Homeland, which screened on the Ten Network on Sunday night.
As feared, ratings for the premiere of the second season came in well down, at 630,000, compared with about 1 million viewers during the first season.
This, coupled with media speculation that CHAMP Private Equity had concerns about the performance of Ten's outdoor advertising business Eye Corp, resulted in Ten's share price falling more than 5 per cent to 35¢, putting it on a market cap of $503 million. Despite Ten's protestations that sale ''discussions remain ongoing'' the market appeared unconvinced.
The huge audience drop for Homeland raises serious questions about the challenges facing traditional TV. The brutal reality is this: content that has screened in other parts of the world is increasingly subject to online piracy and other platforms that allow internet browsers to get around ''geo-blocks'' on content.
More and more Australians are signing up to US iTunes accounts to download shows from the US. They buy US iTunes gift cards on eBay.com and use them to buy content from the US iTunes store, which has US shows' day and date.
Others go to sites such as US Unlocked to create debit cards with a US billing address. These sites can create virtual private networks, or VPNs, which allow customers to set up a US IP address to access sites such as Hulu, which provides TV show downloads for free.
The IP address tricks the Hulu site into thinking that you are in America and therefore entitled to see the content. These shows are in high definition, are without the ads and can be watched at any time, rather than at a time dictated by the TV stations.
The traditional TV model is under attack, particularly with regard to big output deals with US production houses. Although Ten fast-tracked Homeland, it wasn't fast enough. The US has just aired episode three and with so much illegal - and legal - downloading going on, Homeland was just the latest example of the effects.
TV stations and Foxtel have been trying to resolve this by bringing forward screenings to tie in closer to US premieres, but even a few weeks' delay is having an impact on internet downloads.
This year Foxtel in particular has launched an aggressive campaign of fast-tracking content under the banner ''Express from the US'' in an attempt to create a clear point of difference in the market.
It is fast-tracking more than a dozen shows with new episodes of Sons of Anarchy and Boardwalk Empire airing within hours of their US broadcast.
Two new US series - 666 Park Avenue and Revolution - are airing on Foxtel within 12 and 36 hours, respectively, of their US broadcasts.
Ten's strategy is weaker - and is yielding softer results.
New episodes of New Girl are being broadcast 10 days after the US, but are launching to fewer than half a million viewers nationally. Likewise the dip with Homeland.
For Ten in particular the challenge is trying to create results while fast-tracking in a measure of days as rivals such as Foxtel fast-track within hours.
Seven is planning to fast-track new episodes of The Amazing Race, Grey's Anatomy and Once Upon a Time, but like Ten it will schedule them days after their US broadcast, not hours.
One of the most striking examples this year was the ABC's scheduling of Doctor Who. New episodes of Doctor Who were available to its online and app-based iView service within an hour of airing in the UK, and were aired on terrestrial TV a week later.
The ABC's advantage in that regard stems from the dominance of its iView service. Similar services on commercial broadcasters have been slower to launch and more piecemeal in their offering, handing iView the lead.
But the surprising result was that the early release on iView did not materially damage the terrestrial ratings and anecdotal evidence suggests some viewers who had watched it on iView also watched it on terrestrial TV to participate in the second screen-based activity, such as social networking.
While there is no qualitative data from broadcasters around the world on whether there is a significant commercial imperative to fast-track content, anecdotally it seems broadcasters net the best result when content is turned around within 24 hours.
But TV is also under siege globally with the rise of internet TV. In the US, figures from Comcast reveal a drop of almost 400,000 subscribers in the past year. Time Warner Cable lost 169,000 subscribers in the June quarter and DirecTV reported a loss of 52,000 subscribers over the same period.
This is a frightening trend and is more serious than if viewers started cutting subscriptions to pay TV in Australia because in the US free-to-air TV has to go through cable, so if cable subscriptions are being cut then people are also abandoning free-to-air TV.
With Nine under siege, Ten's share price tanking, along with Seven's, it is becoming increasingly difficult to put a prospective valuation on these businesses.
With MICHAEL IDATO