Viewing habits don’t sit still

August 5, 2015

The recently reported deal by Amazon to pay US$250 million for three years of global rights to the new series of ‘Top Gear’ highlights the continuing shift in power within the media and telecommunications world. Content and the ability to fully monetise its dissemination now dictates valuations. In an effort to boost the appeal of its subscription based shopping site Prime, Amazon has been aggressively investing in digital content for some years. The latest deal will value each episode of the world’s most popular TV show with more than 350 million viewers, at US$7 million per episode. Although a headline grabbing number, it is in keeping with similarMorgan Wealth Logo content deals, with Netflix believed to have paid around US$100 million for two seasons of ‘House of Cards’ or US$4 million per episode.

Local media and telecommunication participants continue to seek alliances and joint ventures in a bid to compete in this high stakes business. The arrival in Australia of international heavyweight Netflix earlier this year took the number of video on demand services to five, in addition to the existing five free-to-air broadcasters. And with exclusive access to high quality content, Netflix has made an extraordinary impact with over one million people subscribing to their services within the first four months.

Activity between the larger domestic players is now hectic as each looks to protect their current business, while establishing positions across media sectors. Recent moves by Foxtel, backed by News Corp and Telstra,  are indicative of the path now being taken by some media organisations. Foxtel has purchased a 15% stake in the Ten Network and is a partner with Seven Network in video on demand service, Presto. This positions it across traditional television, pay television, online and ISP services, amongst others.

The success of local organisations will be dependent on the quality, exclusivity and price of their content. With Google’s YouTube thought to be looking at streaming some of Australia’s most loved sports, the price for sought-after local content may be about to soar. This will place further pressure on the profitability of Australian television networks, as they fight to hold their audience and the associated advertising income.

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