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The disintermediation gathers pace

The disintermediation gathers pace

Streaming services from Netflix and Hulu have dramatically cut the viewer numbers of the top US cable companies. According to Nielsen, the aggregate audience of the top six US cable channels declined 21 per cent from 11.8 million in July 2014 to 9.3 million in July 2015. So far this summer, (free to air) broadcast and cable channels are averaging 94.7 million viewers, down 3 per cent year on year, and down 6 per cent on the 2013 numbers.

Screen Shot 2015-08-19 at 2.38.44 pmIn recent years free to air broadcasters have responded to the disintermediation of the sector with more aggressive programming, and this has been reflected domestically with the jump in the broadcasting rights to the biggest winter sporting codes.

Nine Network has paid the National Rugby League (NRL) $185 million per annum for a five year package commencing in 2018 to receive exclusive live coverage of the four biggest games each week, the finals and the three annual State of Origin games.

Not to be outdone, Seven Network as part of a total $2.5 billion package will pay the Australian Football League (Aussie Rules) $140 million cash and $10 million of contra per annum to broadcast 3.5 games per week for six years commencing 2017. The balancing $1.63 billion will come from Newscorp, Foxtel and Telstra.

Both Seven Network and Nine Entertainment have recently announced reduced earnings on a softer than anticipated Free to Air advertising market combined with flat costs. This excludes the $1.9 billion impairment of Television Goodwill and Licenses announced by the Seven Network earlier today.

To learn more about our domestic and global funds, please click here, or contact me, David Buckland, on 02 8046 5000 or at dbuckland@montinvest.com.

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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