TV stations battle for ad revenue as Brexit bites
RTE and TV3 try to lure viewers and advertisers with autumn schedules, writes Samantha McCaughren
The National Concert Hall was decked out in TV3's signature silver and purple hues last week for the glitzy launch of its autumn schedule. The last quarter of the year is the key revenue-generating season for television and so the team from Ballymount in Dublin was in full showbiz mode, highlighting the best the group has to offer to media and advertisers alike.
The highlight of the schedule is its new shiny floor show, Ireland's Got Talent, whose star judge will be talent show veteran Louis Walsh.
But the heavy sprinkling of TV stardust at the launch, coming a week after RTE's autumn launch, belied several challenges now facing the television industry.
Just the day after TV3's launch, RTE gathered staff to outline its redundancy scheme and restructuring which will help them stem losses that amounted to €20m last year. Up to 300 people will leave the organisation.
"There's no disguising that alongside what I believe is an exciting future, there will also be some painful choices," said director general of RTE Dee Forbes. "Our financial situation requires us to reduce costs and employee numbers."
Media is going through a challenging time, with rivals such as Facebook and Google now threatening consumption patterns and revenue. For TV, ad revenue has been hard hit by Brexit with significant spending decisions on TV made in London. Weaker sterling is being acutely felt by the indigenous stations.
Willie O'Reilly, commercial director of RTE, said the market remains tough. "The industry thought after a year of Brexit it would begin to ameliorate but actually it got worse. The movement to 91p to the euro frightened the life out of a lot of people.
"I have three people in the UK as we speak doing business there. But in the UK they are making their decisions in sterling. They won't be upping their budgets because of the change in sterling," he said.
Approximately 25pc of RTE's advertising comes from the UK. And TV3, now part of the wider Virgin Media group, is more exposed to the sterling movement as all of its revenue is commercial, unlike RTE which also has licence fee income.
"Currency is driving uncertainty across a real range of our clients, in particular food groups and the FMCG (fast-moving consumer good) sector," added O'Reilly. "All of the agencies will have reduced their predictions for TV for this year."
Bill Kinlay, chairman of Group M, one of the largest agencies in Dublin, expects TV ad spend to be down for the year. "There are still a few things up in the air but we are saying it will be down 4pc to 5pc."
He believes Sky's advertising house, which acts for UK channels selling ads on their Irish streams, will fare better than RTE and the TV3 group of stations.
"Sky's attraction is that it is a younger audience, its a more urban-based audience generally, it's slightly more upmarket and the cost of airtime on Sky makes it very attractive. You wouldn't put all your money into Sky but your costs to market of TV would be significantly more expensive if you didn't have Sky."
While revenues are being squeezed, the other spectre hanging over television is the shift to Netflix, TV players and illegal downloading. According to agencies, overall TV viewing in Ireland has dropped by 4pc for all adults and 9pc for adults aged 15-34 during the period of January to August 2017 compared with the same period in 2016.
Naturally, the TV stations play down that threat. "There are changes in consumption and there is no doubt that people are subscribing to audiovisual material but 80pc to 85pc of viewing still continues to be on live TV," said O'Reilly.
"The impact is an awful lot less than people say and to some extent, its a substitution for what used to be DVD viewing."
TV channels are reacting by focusing more on live events. This was clearly seen in TV3's schedule, drawn together by its new director of programming, Bill Malone. Red Rock, its critically-acclaimed Garda soap will not resume filming in September.
Sources said: "It's no surprise that TV3 got rid of Red Rock, it's very expensive to make Irish programming. It is a clever commercial decision. They can put the money into the salaries of the Ireland's Got Talent judges and make a big impact in viewer numbers."
As well as Ireland's Got Talent, TV3 also revealed its new technologically-sophisticated news studio, while the Six Nations will also be a huge addition to its schedule.
Malone said: "All areas will take a big step up, all boats will be rising." He said some people had asked him why a commercial broadcaster was investing in news. "Live content is key and news is live content, sport is live content and big entertainment is live content," he told the Sunday Independent.
Even TV3's big soaps, Coronation Street and Emmerdale are more often watched live then on catch-up.
Malone also points out that as part of Virgin Media, TV3 benefits from the catch-up viewing in any event. A hit from the summer was Love Island, which was 3Player's biggest ever hit with 2.3 million streams.
"On a number of occasions the streaming was bigger than linear viewers for that show."
While TV3 and RTE may be upping their game on live programming, digital rivals will too.
"Global players like Netflix, Google, Facebook Live, YouTube, Amazon Prime, etc will continue to invest in content and programming and also buying rights to sports events and other live events," said an industry source.
"This will naturally put the likes of RTE and TV3 at a disadvantage as they wont be able to compete for rights against these companies. It wouldn't surprise me if in the a few years YouTube will show the Football World Cup and it won't be available on TV as it was. The same is true of things like Eurovision, the Oscars and other sports and award shows," he said,
Brands and their money will follow the audience. A senior advertising source said that clients didn't mind where people are watching material as long as they can still advertise there. Netflix is an ad-free zone and won't necessarily compete with TV3 and RTE.
"These companies (such as Netflix) will be unlikely to invest in local content - and especially in local current affairs. I can't see a Netflix doing the Irish 9 o'clock news or Amazon doing the Prime Time documentaries."
"This is where RTE and TV3 need to go - quality home-grown Irish drama and news/current affairs," added the advertising insider. "It was great to see both companies highlighting the importance of this in their new schedules. This is the huge positive of the schedule launches."
He said that while most people will focus on Six Nations and other "big" events they shouldn't underestimate the importance of Ireland AM, Prime Time and these type of shows for the Irish broadcasting sector.
With the showy autumn launches now delivered, the real business of TV - selling ads for peak season - begins in earnest.
Sunday Indo Business