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CHANNEL 7 The televisine advertising market was decreasing in profit, and new online media was proving attractive to attrastisers. There was also the possibility of cimges to the funding states of rival Public Channel SBS (Hybrid-funded with 80% coming from public money) and publicly-owned ABC Channel 7 needed to develop a strategy to address these issues In 2016, Channel 7 was the most successful of the 5 Coacial broadcasters in Australia in terms of population reach producing content and turoadcasting for different cience-targeted channels. Owed by Seven West Media, it was having one of its most successful years yet having achieved its largest ever lead in ratings in total people and every other bey demographic It had reduced underlying operating costs by 1.0% since the previous year, baunched live streaming 247 across all channels (Plus 7). delivered over 65m streams and secured a reduction in FTA license fees. Positioned at number one of the TV advertising for revenue and ratings and with its Commercial Advertising Video on Demand (AVOD) catchup service deseloped in partnership with Yaboo (Yahoo 7) also mumber one. Channel 7 were hitting many of their strategic targets. The main source of Channel 7's revenue in 2016 came from advertisers, having captured 38.9 per cent share of advertising, marking a decade of revenue leadership compared to their Commercial rivals Channel 9 and Network 10. However, nationwide teletision advertising decreased 2.0 per cent is the same period (based on Free TV data). Worth more than $3 billion in 2011, Seren West Media's market capitalisation had fallen to $1 billion by end of the 2016 financial year (as per Figure 1). While program sales and third-party productions were up 92%. the underlying profit after tas of $207.3m was dous 0.9% Year on Year (YoY) while Earnings Before Interest and Taxes (EBIT) totalling $318. Im was down 10.7% Seven West Media was also hampered by carrying billion in debt Up until 2016. Channel 7 had gained its strong position through a blend of content, broadcasting reach and advertising power. As an integrated producer broadcaster, Chamel 7 created value from content that it developed, Opped and distributed around the world. The company was espanding its presence in the further delivery of ita video and publishing content beyond its digital broadcast channels and across an array of platforms, specifically Plus? Channel 7 had also secured a presence in Subscription Video on Demand (SVOD) through its Presto joint venture with Foxtel, one of Australia's leading pay TV providers Channel's predaction arm, Productions, was the largest producer of content in Australia creating.comissioning, and producing over 670 hours of content in 2016 and recognised as a leader in the production of scripted entertainment, reality, observational decurs and children's programasing Production was espanding via esisting partnerships in Beyond and Tonder, which provided is ovative de local and international Commissions through a global network on the derelopment. Brodosion and distribution of content The quality of this context, in addition to significant long-term parmerships with the Australian Football League os Est International Osugic Committee, stracted commercial audiences that subsequently drove advertising Terenda 1 had made some is in the past, one of the most potable being the cancellation of the soap opera Negaborsicht: Commissioned by Chanel is 1955 but cancelestis 4 months due to poos perintance is the Sydory market teistely Commissioned by mal Network 10. et te Decote the longeng drama series Sevo West Melaweices NI Tiga Wita San
Australian television history and has found a significant overseas andience. Outside of the television market, different entertainment platforms such as online TV and internet had been growing rapidly in Australia by 2016. The Traditional TV broadcasting industry market was becoming saturated and slowing down. Commercial television in Australia was reaching 85.1% of the population aged over 13 years old (down from 93.1% in 2008) with viewership decreasing fastest in viewers aged under 50 (as per Figure 2) 1111111 2006 In terms of other resources, investing in a portfolio of channels and digital assets to reach all demographics also extended the brand Human resources were supported through training and development Channel 7 had high quality production capabilities and owned several production companies and studios. They also purchased content from external Content, advertising and broadcasting were of central importance to Channel 7. giving it advantages over Commercial competitors with strong content and broadcasting variety but less advertising revenue and Netflix with much less content and only one distribution medium Figere 2 crew in sumber of people who watch televisies, by means This was attributed to a tougher and more competitive environment brought about by Video on Demand (VOD) and streaming services. The arrival of Netflix, the world's largest VOD provider with 42 million subscribers, capitalised at 533bn, in 2015 was significant for Channel 7' own Online Video on Demand (VOD) service la 2006. Channel had announced its partnership with Yahoo - a new 50-30 digital business known 2 Yahoo. The deal was initially helpful with providing technology and building atidence to 2015, Channel 7 resped and relaunched its Broadcast VOD services, where consumers could live stream channels and catch up on broadcast TV via the internet. The problem for Channel was that ustil 2017, its BVOD service Plus continued to be a joint venture with Yahoo, which saw half of its growing online revenbe sent to Yahoo In the ance year, Channels rival Channel 9 also launched its joint vetture streamang service called Star It also expanded its presence in new businesses beyond its core strengths in media to include a portfolio of companies such as tasker (local trades and services marketplace). Society Dige (peer-to-peer lending). HealthEreira (health service marketplace). Nesszuin (UGC content management). Nahe (social network). Starts at 60 (online community for a 60+ audience) and MediaBarch (News Exchange Platform). Legislatively, there was also active public debate about mbather SBS and the ABC should receive less public funding, which would force them to compete with commercial broadcasters och as Chancel? for advertising revenue On a more positive note, the Australian Government was debating a series of reforza to Australia's media laws including the Broadcasting and Content Reform Package. The rules in 2016 restricted traditional media companies from optinising the scale and scope of their operations and from accessing reiource, capital and managemant expertise in other media sectors While these laws have been adjusted over time in an attempt to accommodate changes is technology and media consumption patterns, more fundamental reform was considered necessary in 2016 te support the Tiability of domestic Media organisations tha face of tecrassig zlobal competition in a rapidly changing digital Indicape By 2016, the internet (4325 maret share) had overtaken television (228) as the biggest advertising platform in Australia (25 per Figure 3) |
CASE STUDY: CHANNEL 7 in 2016 Answer All Three Questions All three questions carry equal marks Word Limit: 700 words per question (2,100 words in total) Case Study Questions 1. Identify the main strategic threats facing Channel 7 in 2016, considering the domestic and global market in which it was operating. 2. Discus Channel 7's business-level strategy in 2016 (25% of question 2) and identify and discuss the Resources and Competences which provide Channel 7 its competitive advantage in 2016 (75% of question 2). 3. Select two topics of Strategy theory taught in MG3103 but not included in your answers to questions 1 and 2. Discuss how these two topics could be applied to, and could benefit, Channel 7 in 2016.
In 2016, Channel 7 was the most successful of the commercial broadcasters in Australia in terms of population reach, producing content and broadcasting for different andience targeted channels. Owned by Seven West Media, it was having one of its most successful years yet having achieved its largest ever lead in ratings in total people and every other key demographic. It had reduced underlying operating costs by 1.6% since the previous year, launched live streaming 24/7 across all channels (Plus 7), delivered over 65m streams and secured a reduction in FTA license fees. Positioned at mumber one of the TV advertising market for revenue and ratings and with its Commercial Advertising Video on Demand (AVOD) catchup service developed in partnership with Yahoo (Yahoo 7) also number one, Channel 7 were hitting many of their strategic targets. The main source of Channel 7's revenue in 2016 came from advertisers, having captured 38.9 per cent share of advertising, marking a decade of revenue leadership compared to their Commercial rivals Channel 9 and Network 10. However, nationwide television advertising decreased 2.0 per cent in the same period (based on Free TV data). Worth more than $3 billion in 2011, Seven West Media's market capitalisation had fallen to $1billion by end of the 2016 financial year (as per Figure 1). While program sales and third-party productions were up 92%, the underlying profit after tax of $207.3m was down 0.9% Year on Year (YoY) while Earnings Before Interest and Taxes (EBIT) totalling $318.1m was down 10.7%. Seven West Media was also hampered by carrying billions in debt. Seven West Media share price ($) 4.0 om 3.0 2.5 2.0 1.5 1.0 0.5 2015 2016 2011 2012 2013 2014 Tiger Seven West Media SharePrie Dediese Blumber) The television advertising market was decreasing in profit and new online media was proving attractive to advertisers. There was also the possibility of changes to the funding status of rival Public channels SBS (Hybrid-funded with 80% coming from public money) and publicly-owned ABC. Channel 7 needed to develop a strategy to address these issues. Up until 2016, Channel 7 had gained its strong position through a blend of content, broadcasting reach and advertising power. As an integrated producer broadcaster, Channel 7 created value from content that it developed, owned and distributed around the worid. The company was expanding its presence in the further delivery of its video and publishing content beyond its digital broadcast channels and across an array of platforms, specifically Plus 7. Channel 7 had also secured a presence in Subscription Video on Demand (SVOD) through its Presto joint venture with Foxtel one of Australia s leading pay TV providers.
Channel 7's production arm, 7Productions, was the largest producer of content in Australia, creating, commissioning and producing over 670 hours of content in 2016 and recognised as a leader in the production of scripted, entertainment, reality, observational documentaries and children's programming. Production was expanding via existing partnerships in 7Beyond, and 7Wonder, which provided innovative new local and international commissions through a global network in the development production and distribution of content. The quality of this content, in addition to significant long-term partnerships with the Australian Football League and the International Olympic Committee, attracted commercial audiences that subsequently drove advertising revenue. It had made some mis-steps in the past, one of the most notable being the cancellation of the soap opera Neighbours which was commissioned by Channel 7 in 1985 but cancelled within 4 months due to poor performance in the Sydney market. Immediately commissioned by rival Network 10, it went on to become the longest-running drama series in Australian television history and has found a significant overseas audience. Outside of the television market, different entertainment platforms such as online TV and internet had been growing rapidly in Australia by 2016. The Traditional TV broadcasting industry market was becoming saturated and slowing down. Commercial television in Australia was reaching 85.1% of the population aged over 13 year:@(down from 93.1% in 2008) with viewership decreasing fastest in viewers aged under 50 (as per Figure 2). o ހައިރާރޯލު Figure 2: Increase in number of people who watch no relevision, by age range This was attributed to a tougher and more competitive environment brought about by Video on Demand (VOD) and streaming services. The arrival of Netflix, the world's largest VOD provider with 42 million subscribers, capitalised at $33bn, in 2015 was significant for Channel 7's own online Video on Demand (VOD) service. In 2006. Channel 7 had announced its partnership with Yahoo - a new 50-50 digital business known as Yahoo7. The deal was initially helpful with providing technology and building audience. In 2015, Channel 7 revamped and relaunched its Broadcast VOD services, where consumers could live stream channels and catch up on broadcast TV via the internet. The problem for Channel 7 was that until 2017, its BVOD service Plus continued to be a joint venture with Yahoo, which saw half of its growing online revenue sent to Yahoo. In the same year, Channel 7's main rival Channel 9 also launched its joint venture streaming service called Stan
By 2016, the internet (432% market share) had overtaken television (22.8%) as the biggest advertising platform in Australia (as per Figure 3). ファック Fire 3: 2016 Advertise weddini Atesli by plafoem, wunce with In terms of other resources, investing in a portfolio of channels and digital assets to reach all demographics also extended the brand. Human resources were supported through training and development. Channel 7 had high quality production capabilities and owned several production companies and studios. They also purchased content from external studios. Content, advertising, and broadcasting were of central importance to Channel 7, giving it advantages over Commercial competitors with strong content and broadcasting variety but less advertising revenue and Netflix with much less content and only one distribution medium. It also expanded its presence in new businesses beyond its core strengths in media to include a portfolio of companies such as Airtasker (local trades and services marketplace), Society:One (peer- to-peer lending) Health Engine health service marketplace). Newzulu (UGC content management), Nabo (social network), Starts at 60 (online community for a 60- audience) and MediaBeach (News Exchange Platform) Legislatively, there was also active public debate about whether SBS and the ABC should receive less public funding, which would force them to compete with commercial broadcasters such as Channel 7 for advertising revenue. On a more positive note, the Australian Government was debating a series of reforms to Australia's media laws including the Broadcasting and Content Reform Package. The rules in 2016 restricted traditional media companies from optimising the scale and scope of their operations and from accessing resources, capital and management expertise in other media sectors. While these laws have been adjusted over time in an attempt to accommodate changes in technology and media consumption patterns, more fundamental reform was considered necessary in 2016 to support the viability of domestic media organisations in the face of increasing global competition in a rapidly changing digital landscape.