No Budget comfort for FTA TV on spectrum tax

Free-to-air broadcasters face a 9% revenue drop in FY24 while the CPI-indexed spectrum tax remains a legacy burden.

David Kennedy · Venture Insights24 May 2024Period: FY244 min read

9%↓

Forecast decline in FTA TV advertising revenue (FY24)

8%↓

Actual decline in FTA TV advertising revenue (FY23)

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Abstract

This report analyses the increasing financial pressure on Australia's free-to-air (FTA) television industry following the lack of regulatory relief in the recent Federal Budget. With advertising revenues forecast to decline by 9% in FY24 following an 8% drop in FY23, the industry remains burdened by the CPI-indexed Commercial Broadcasting Tax (CBT). The brief examines why the CBT is now considered a relic of 2017 reforms and the risks associated with delaying its removal during a broader five-year media sector review.

Key Takeaways

FTA TV advertising revenue is forecast to drop 9% in FY24, following an 8% decline in FY23, nearing pandemic-era lows.
The Commercial Broadcasting Tax (CBT), introduced as an interim measure in 2017, has become a significant financial burden due to CPI indexing.
The CBT was originally set at $43.5 million annually but has increased during a period of high inflation and falling broadcaster revenues.

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Frequently Asked Questions

The industry is facing a significant contraction, with advertising revenue forecast to drop 9% in FY24 following an 8% decline in FY23. These consecutive losses bring sector earnings close to pandemic-era lows, severely limiting operational flexibility.

The Commercial Broadcasting Tax was established as an interim measure at $43.5 million in 2017 but has since climbed due to CPI indexing. This creates a widening disconnect where tax obligations rise while broadcaster revenues are shrinking by nearly 10% annually.

The Budget provided no immediate financial relief from the spectrum tax, instead allocating $22.6 million to a media sector review. This move signals that any meaningful regulatory reform is likely delayed for the duration of this five-year inquiry.

Regional broadcasters are disproportionately affected because the tax is applied on a per-transmitter basis rather than being scaled to revenue. This model forces smaller regional players to carry a heavy financial burden despite generating significantly less income than metropolitan networks.

No Budget comfort for FTA TV on spectrum tax

Abstract

Key Takeaways

Frequently Asked Questions

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