It was just over a year ago that Australia got its first new freeto- air channel in nearly 40 years but this small step has opened the floodgates to a new media battleground for television advertisers and viewers alike. All the major free-to-air TV channels now have an additional digital service – known collectively as Freeview – with Network Ten first out of the gate with sports station One, Nine Network launching in August last year with its youth-skewed general entertainment offering GO! and the Seven Network launching general entertainment channel 7TWO last October. Public broadcaster the ABC has two additional channels, ABC2 and kid-specific channel ABC3 and multi-cultural broadcaster SBS (Special Broadcasting Service) has a second channel. More new channels are promised in the coming year. This free-for-all in the digital space has managed to reverse the trend of viewers heading away from the main free-to-air station in favour of online and pay-TV with viewing figures showing that evening audiences across free-to-air were up 1.4 percent and there were individual spikes of up to 15 percent across the new digital channels such as GO! and 7TWO particularly when screening repeats of popular shows like “Underbelly: The Golden Mile” or the final series of “LOST” which Seven chose to put on 7TWO after it lost traction on the main station. “When Freeview was first mooted people thought it was just a marketing stunt,” says James Warburton, chief sales and digital officer at Seven Media Group. “But when you look at the quality of programming that 7TWO and GO! have got on-air there are nights when up to 10 or 11 percent of the viewing population are choosing a multi-channel.” Both 7TWO and GO! are clocking up auds of 100,000-plus during prime time or about three percent of overall viewers each, sports offering One trails with a little over a one percent share while the combined ABC2 and ABC3 sees a prime time share of two percent. SBS comes in at 0.5 percent of viewers. Warburton says the overall ad market this year has seen a “very solid correction” and he expects it to be back to pre-GFC levels this year, far quicker than many in the industry expected. And he puts that growth down to the wealth of new advertising outlets. “When you look at the combinations of the main channels and the multi-channels you are seeing a really strong level of increase in audience up in the vicinity of three percent,” says Warburton. “At a time when fragmentation continues we are able show a way to grow our audience and have as big an impact as we normally would.” Free-to-air ad spend tends to follow the ratings with Seven grabbing an estimated 36.9 percent of metro advertising in the first half of this year, Nine on 33.1 percent and Ten on 30 percent, an almost two point rise attributed mainly to the juggernaut cooking show “MasterChef Australia”. But at the halfway point Seven and Nine and currently neck and neck in the ratings race, so with half the year to go Seven’s place on top, secured for the past few years, cannot yet be guaranteed. This seller’s market means that the free-to-air networks head into the new financial year advertising rate negotiations, held with major media buyers at the end of June, with a strong story to tell about increasing audiences and will likely use it try to push up advertising rates to further help the recovery. There is also a lot of talk that this new multi-channel environment is beginning to harm pay-TV which has seen steady, even impressive, growth in both advertising and subscribers during the financial crisis as people chose to stay home and sit in front of the box and sign up for a range of viewing options. But, in terms of advertising many media forecasters have suggested that rather than the double digit growth of last year, pay-TV will do well to keep pace with the overall ad market which is expected to grow a modest three to five percent across the board. The free-to-airs argue that the extra channels have blunted pay-TV’s advantage. Anthony Fitzgerald, chief executive of Multi Channel Network (MCN, which books the majority of ad space on pay-TV) disagrees. “The free-to-air networks are, at best, going to recover the revenue losses that they have experienced over the last 18 months during the same period our revenue will have grown by over 30 percent,” Fitzgerald says. “It’s very clear by the numbers they are not taking the revenue from us, they are just recovering their losses.” But, like Warburton, he believes the increase in competition is benefiting the medium as a whole and helping to grow the overall advertising pie for the television networks. “Financial year ‘09 was not a great year for anyone but financial year ‘10 has been a year of two halves in the general market,” he says. “The December half was still a bit challenging but significantly better but this current June half has been a tremendous turn around for the total market.” It is believed that new subscription growth at Foxtel is maintaining a growth rate of 5 percent. Foxtel’s direct subscriber base grew by five percent (to 1,516,000) for the six months to December, compared with the previous first half. Pay-TV also released a suite of 30 new channels this year to banish the perception that all the action was happening in the free-to-air space, with a range of offerings including new specialised movie channels such as Showtime Drama, Showtime Comedy and Family Movie Channel as well as a number of time-shifted channels. A range of High Definition offerings were also part of this push which was the biggest new channel release since the launch of digital TV. On the subject of time-shifting, or catch-up, another new media battleground has opened up in the online streaming services from the major networks. Eighteen months ago the space was virtually owned by the ABC that was aggressive online with its iView service. The service was a huge hit and proved that auds are keen to move from TV to the internet to watch their favourite shows. But now Seven has launched PLUS7, Nine Network has full episodes on its NineMSN portal and Ten Network offers a range of full episodes on its website. In an Australian first earlier this year iView bowed a popular show ahead of its terrestrial launch with BBC’s debut of new Dr. Who Matt Smith online from midnight on April 16, ahead of the ABC showing on April 18. Kate Ryan, manager of iView, says a close relationship with the U.K.’s BBC helped overcome the rights issues that the internet premiere generated and says that the ABC was not afraid that the network showing would not draw auds. “In terms of cannibalisation, there is lots of proof that if you offer online content, people don’t necessarily make the choice to just remain online,” Ryan says, suggesting the online can actually drive audiences towards the main channel, a view supported by Warburton. But, of course, the ABC does not have to keep advertisers happy so there are no plans for online premieres from the commercial networks, though it does show the maturity and innovation in the market. And many online hit shows abound, such as “The IT Crowd,” sci-fi show “Sanctuary” and U.S. hit “The Colbert Report” all rating solidly on iView. On the main terrestrials channels though the year’s runaway hit has once again been reality show “MasterChef Australia”, now in its second season. The show, an imported and re-jjgged format from the UK, is estimated to be bringing Ten an annual advertising haul in the order of $65 million. Regularly rating just under the two million mark and marketing in ad-friendly nightly strips there are also high hopes for “Junior MasterChef” which will premiere later this year using kids. A series of “Celebrity MasterChef” has also aired to solid ratings. The key to the show’s success is a very persuasive integrated marketing approach with a range of sponsors, in addition to several food “partners “, who benefit from the show’s ample opportunities for product placement. Elsewhere the return of Seven’s powerhouse drama “Packed to the Rafters” recently drew amazing audiences of 1.9 million to the family drama’s latest series. The show has proven to be a key pillar to Seven’s success. Over on the Nine Network it has been the latest outing of the “Underbelly” series that has seen it back in contention as a possible ratings champion. The series mines Australia’s rich history of true crime, though this latest instalment was criticised for not having the same level of accuracy as its predecessors; show has also been plagued by legal cases from some of the “characters” it portrays though this has mainly served as free publicity. Other shows to perform well included Nine’s rescue drama “Sea Patrol” and its holiday format “Getaway”, Seven’s perennially popular documentary format “Border Security” and its new football show “The Matty Johns Show”. A controversial win after Johns defected from Nine’s football offering. But one thing on the decline is the once-dominant position of American content in Aussie homes. The change in viewing habits reflects not only strong local content but also the GFC’s negative effect on US studio output. That said Chuck Lorre’s “Two and Half Men” still performs well for Nine and Seven got good figures from “LOST” even on 7TWO and Ten regularly rates with its “NCIS” franchise. And output deals mean that there will always be a strong US presence in Aussie homes. So with their hands full much of the focus for the networks has been how to sell in this new multi-channel environment and the focus is on packaging and integrating the advertisers. “Were finding that the integrated campaigns we are doing are having a much greater sales effect than just buying spots so if you can magnify through a property you can have a big effect on sales,” says Seven’s Warburton. It is an approach that pay-TV knows well but Anthony Fitzgerald is not too concerned about the onset of new mediums saying that “the structural shift away from traditional mass media has not been happening at the rate that online or general market doomsayer are predicting”. But he has been enjoying watching the free-to-air networks, who once derided the multi-channel world of pay-TV to advertisers as fractious and ineffective, embracing the idea of an aggregated audience figure. “We’ve been selling in an multi-channel environment for a while now,” says Fitzgerald. “And we have structured our business so that we sell our audience on an aggregated basis to deliver reach goals, to deliver effective frequency goals, to deliver targeted audiences in the right environment and I love it now that the FTA networks – who have been openly critical of this in the past – are now talking the same way.”