Published:
29-Feb-08
Telecinco has become the first Spanish broadcaster to reach €1bn in annual advertising revenues, increasing its lead over main rivals Antena 3 and RTVE. The broadcaster earned €1,006m in advertising revenue in the 12 months to end 2007. Telecinco derives 93 per cent of its income from the sale of advertising airtime, of which þ15m comes from digital channels, online services and Teletext. The broadcaster achieved its record result despite a slow down in the overall market. Spain's TV advertising income grew 9.2 per cent in 2006, but only 7.2 per cent in 2007. During the same period Telecinco increased its advertising growth from six to nine per cent. By contrast, Antena 3's TV advertising income dropped 0.2 per cent to þ803m, although its overall commercial income was helped by €100m from its radio airtime sales division.
Our take...
Telecinco's continuous growth in advertising income since 2002 can be seen in two phases. Until 2005 its growth had been similar to that of rival Antena 3, but the entrance of Cuatro and La Sexta in 2005 saw both channels lose audience share. However, Antena 3 bore the brunt of the loss: its audience share fell from 21.3 per cent to 17.4 per cent between 2005 and 2007, while Telecinco's dropped just two percentage points to 20.3 per cent.
Telecinco could turn this eroding audience share into a gain: not only did Antena 3's audience share decline more rapidly, but Telecinco has also upheld the highest audience share in the crucial prime-time segment.
However, it is also the emerging channels Cuatro and La Sexta that may have helped Telecinco indirectly. Being the leader in audience share enables Telecinco to set advertising prices for the market while other broadcasters have to position their pricing as a response. Nascent but rapidly growing channels Cuatro and La Sexta, with their still rather small audience share, can charge only far lower prices than Telecinco and Antena 3. This puts Antena 3 in an uncomfortable intermediary position with faster declining audience share and the high-priced cost per thousand of an established national broadcaster.
This dilemma explains why Antena 3 is heavily investing in DTT. In order to counteract audience fragmentation and therefore the erosion of advertising revenues, Antena 3 launched thematic channels 'Neox' and 'Nova' in 2005. By contrast, Telecinco claims that digital TV in Spain had not yet reached a critical mass to justify major investments in new channels. While Telecinco anticipates only slow growth of DTT, Antena 3 expects a rapid uptake. The future power distribution of the two big Spanish commercial broadcasters may depend on whose DTT scenario proves accurate.
Screen Digest forecasts that the Spanish TV advertising market will slow down in 2008, growing only 5.2%, after double-digit growth in the mid-2000s. Spain will nonetheless remain the most dynamic TV advertising market in Western Europe.
Spain,
