Free-to-air broadcasters are set to launch a $40 million advertising blitz to whack pay television and attract customers to digital terrestrial TV.
The campaign, to go to air in six weeks, is backed by the three commercial broadcasters, the ABC and SBS, and will have more air time than the former Coalition government's advertising splurge for the GST, which was the single biggest television campaign seen in Australia. Unlike the paid GST ads, the digital TV ads will be run free.
So confident are some of the free-to-air broadcasters about the damage they can inflict on pay TV's - the ad blitz will bundle a line-up of 15 free digital channels available from next year - they say pay TV subscriptions might stall.
In pay TV homes, 40 per cent of viewing is on free-to-air channels. The mid-term goal for the pay TV industry is household penetration of 50 per cent, up from 30 per cent.
"There's no doubt when the consumer has more choice that is free and it is compelling content it's going to hurt pay in some capacity," one TV network executive said this week. "It will slow the rate of growth for pay to a point it may become stagnant in time."
Another TV network executive says the collaboration by broadcasters on the bundle of channels to be called FreeView is unprecedented. It has already resulted in the Seven Network freezing launch plans for its TiVo digital recorder service until at least the middle of this month while it decides whether to proceed, delay or bin the project.
"Free-to-air to this point has sat back and pretended pay TV didn't exist, and now it's in 30 per cent of homes," the broadcast executive says. "Pay TV spends 60 per cent of its marketing funds on [free-to-air] TV. It's their marketing platform. We're going to use it ourselves."
Earlier this week the commercial and public free-to-air broadcasters met to complete a branding joint venture borrowed from Britain also called FreeView. All the free-to-air networks are expected to sign off on a heads of agreement by tomorrow, with one of the sticky issues being board representation - at present each broadcaster is understood to have a seat.
But amid the free-to-air exuberance, the pay TV sector this week produced statistics from Britain it says show Australian broadcasters are deluded in their expectations for curbing pay TV's growth here.
"The arrival of FreeView in the UK did not curb pay TV's growth," says Ian Garland, the commercial director for the Australian Subscription Television and Radio Association.
"Pay TV has continued at the same growth rate. Without a doubt FreeView has grown faster than pay TV since 2002 but even with that growth, cable and satellite pay TV continue to grow at the same pace.
"Pay's [British home penetration] is growing at roughly about 2 percentage points a year, which equates to about 500,000 homes. Pay TV in the UK is not growing as fast as FreeView, but that's not the point. By definition FreeView has to be available to everyone by 2012 because that's when the analogue signal switches off," says Garland.
Like others in the pay TV sector, Garland argues FreeView was launched in Britain with a more compelling offer of 30 channels compared with what will be Australia's initial line-up of 15. "Let's not forget, in the end it's all about content, and people will pay to watch diversified and meaningful content. FreeView won't stop pay's growth. People want multiple choice."There have been question marks over the programming the free-to-air broadcasters here will use across their additional channels but one television network executive said that Foxtel and Austar's content partners had already started discussions with terrestrial networks. "We are about to engage with operators who currently provide to Foxtel who want to move exclusively or simultaneously back to a free-to-air environment," the executive says. "We're going to take Foxtel's content."
Original Story by Paul McIntyre SMH Business Day - 3rd April 08
