- September 21, 2009
- Posted by: admin
- Category: Media & Broadcasting
STRATEGY OF LOWERING RATES CUTS INCOME WHILE e.tv LIFTS EARNINGS ON HIGHER ADVERT CHARGES
The SABC took its eye off the ball and gave up ground to competitor e.tv by lowering its advertising rates to accommodate small advertisers, who were the first casualties of the economic downturn, an industry expert said last week.
At the same time as the SABC dip, e.tv increased its advertising rates, resulting in a 15 percent increase in advertising revenue to R280 million in the latest financial year.
SABC said it had a total advertising revenue decline of R400m in the year to March, with its total loss for the period expected to be R800m.
Gordon Patterson, the managing director of media communications agency Starcom, said no matter how much rates were reduced, small advertisers could not afford the risk.
“The beneficiary of this illconceived strategy was the larger advertisers who have a more medium- to long-term view. ertv by comparison adopted a more cautious approach, and adjusted rates more strategically to ensure continued market support,” he said.
According to Nielsen Media’s latest report on advertising expenditure, the SABC’s advertising revenue declined by 3.7 percent, or R180m – not R400m – and in the same period e.tv, with only one channel, increased its advertising revenue by 15 percent.
e.tv managed to increase its market share to 33 percent in the first half of this year while the SABC saw its share fall to 67 percent, the report said.
According to Nielsen, SABC1 still delivers the largest audience for advertisers.
The SABC declined to comment, saying that it was finalising its annual results, e.tv would also not comment nor provide details on its strategy “Possibly because of its size and its entrepreneurial spirit, e.tv has clearly adopted a more frequent decision making strategy, where the SABC has been more infrequent. With the economy as volatile as it is at the moment, one would have thought a more frequent decision making approach would be more appropriate.
With the new board coming in, we must remain optimistic that change will happen for the better,” said Patterson.
Based on recent presentations from the SABC, he said it appeared that its strategy to be more accessible to smaller advertisers had not been reviewed and its rates remained highly competitive.
“Whether this results in an increase in advertising volumes remains to be seen. It is interesting to note that the SABC station with least competition, SABC1, was and continues to be the most discounted,” he said.
The SABC has asked the state for a bailout of R2 billion.
Majority-owned by listed Hosken Consolidated Investments
Has one free-to-air channel
Advertising revenue grew 15% to R280 million in 2008 financial year
Combined daily adult viewers of 11.9 million
Has three local television channels, SABC1,2 and 3
One struggling SABC international channel
Total advertising revenue declined by R400m in the year to March 2009.
Source: Business Report – Thabiso Mochiko