TV industry’s $450m streaming hopes at risk in privacy crackdown

The great hope of Australia’s major free-to-air broadcast networks – a shift to selling ads to people watching through their own TV streaming apps – is threatened by privacy law changes they claim would undercut targeted advertising.

As part of an overhaul of the nation’s privacy laws, the government wants to broaden the definition of what counts as “personal information”, let people opt out of targeted advertising, and ask for consent before companies can trade that personal information.

In a submission to the government, Free TV, the lobby group representing Seven, Nine and Ten, has argued these changes would torpedo the growing, $450 million trove of advertising revenue broadcasters made through targeted advertising in their apps last year. Targeted ads are those aimed at specific people because of their behaviour or certain characteristics such as age, gender or where they live.

“It is not an overstatement to say that, if fully implemented, the changes set out in the report threaten the ongoing existence of the [free-to-air] commercial television sector,” Free TV told the attorney-general.

Requiring viewers to sign in with an email address, the networks’ on-demand apps 9Now, 7plus and 10 Play have partially offset declining TV audiences while allowing more targeted advertising. All major networks have millions of email addresses for Australians.

Broadcasters have signed deals with data-sharing firms such as Equifax, Flybuys and Ticketek-owner TEG to find out more about their audiences’ buying habits. Targeted ads can be sold for a higher price than mass-reach advertising.

The government is reviewing Australia’s privacy laws and has released a 320-page paper with 116 recommendations that cover issues including direct marketing, targeted advertising, data and consent. It also proposed a direct right of action or a privacy tort, allowing individuals to sue organisations directly for privacy breaches.

Seven, Nine and Ten have joined a chorus of advertising industry heavyweights pushing back against changes to privacy laws proposed by the government.

The major media companies filed a united submission to the government late last week saying some of the government’s proposals would have a “chilling” effect on reporting and journalism.

The Australian Association of National Advertisers last week warned that broadening the definition of “targeting” could have the unintended consequence of putting gambling and alcohol ads in front of children or pregnant women respectively.

Over the past decade, as free-to-air audiences watching through their aerial have steadily declined, broadcasters have shifted to what are known as broadcast video on-demand (BVOD) apps.

While they have grown to $450 million in advertising revenue in 2022, according to industry group ThinkTV, BVOD revenue was still a slice of the $4.19 billion “Total TV” market over that time. But it is forecast to continue to grow over the coming years, offsetting future declines in audiences.

“Without revenue from targeted advertising, the industry as a whole will suffer,” Free TV submitted.

“If our members are unable to offer targeted advertising, based even on the most innocuous information, it will reduce their advertising revenues. A reduction in advertising revenues will directly impact the content that our members can produce, meaning there is less high-quality free local TV content for Australians to enjoy.”

Free TV also came out hard against any changes to an exemption for journalism that is hard-wired into privacy legislation, warning weakening protections could profoundly affect how effective journalists are.

Likewise, a privacy tort or direct right of action could embolden wealthy individuals to litigate against media companies to prevent negative stories from being published. The ability to be “de-indexed” on internet search results would result in a similar outcome, the group wrote.

It is a fraught regulatory landscape for TV networks. They recently navigated a review of the government’s anti-siphoning list, which lists the sports that must remain on free-to-air TV. It stayed the same. That was also described as an existential crisis for broadcasters, with sport driving large, engaged and consistent audiences to monetise through ads.

Then there is a push to reform gambling advertising, which generated $179 million for television networks – including a dedicated racing channel – last year.

Likewise, there is an imminent “prominence” code, which will govern how broadcasters’ apps are presented on the home screen of major internet-connected TVs. TV manufacturers say if they are forced to rank free-to-air broadcasters higher they may bring fewer, worse-quality models to Australia. Financial Review