As COVID-19 spreads in Australia, social-distancing and quarantine measures are becoming the norm. This means that a large number of people are now working from their home and spending time indoors. Alternatives to electronic media such as cinemas, live entertainment, and (importantly) sporting events are closed.  While some subscription media will benefit from this situation, those focussed on sport will feel a harsh impact.

Free To Air (FTA) TV is hit particularly hard, squeezed between falling advertising revenues and local production shutdowns. We expect that weakening of FTA TV’s financial position and their capacity to bid for rights will accelerate the fragmentation of the sports rights market when live sport revives in 2021. The sports organisations themselves face major restructuring. They face short-term pain, but live sport remains highly attractive to viewers and the sports organisation can better leverage their management of rights to maximise revenues by taking a more segmented approach to licensing.

We also believe that the crisis will also step up pressure on the government to bring forward the reform of media regulation, especially of digital platforms. The federal government’s media industry relief package announced this week already undercuts major elements of the media regulation system established in the 1990s. There will be no going back.

Contents

Key takeaways

Introduction

Sports events and broadcast disrupted

Content is king… again

SVOD platforms’ service model is more robust

Structural and regulatory changes to media industry now inevitable

List of charts/tables

Figure 1. If the Coronavirus prevented sporting games or events from being shown on your sporting app, what would your likely response be?

Figure 2. If the Coronavirus prevented you from physically attending sporting games, concerts or events that were occurring, would you consider subscribing to a streaming service to watch those games or events?

Figure 3. 2020 share price movements of major Australian media stocks

Figure 4. List of FTA productions that have been cancelled or postpone

Figure 5. Top 10 most watched TV genres 2018

Figure 6. New Zealand major broadcasters’ revenue (NZD, 2015A – 2019A)