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The Italian commercial TV market remains in a depressed state, and the upcoming General Election is not helping the advertising market, says a report from Morgan Stanley. “Last year [we] anticipated TV ad-spend to be down -3 per cent. It closed 2012 down -13 per cent.” The report says that La7 saw Net ad-revenues tumble 25 per cent last year. Mediaset’s Q1 numbers could slide a massive – 8 per cent, on an already depressed 2012 set of numbers.
As far as Sky Italia is concerned, the bank’s report says “Negative subscriber momentum has led Sky Italia to lose advertising market share in 2H12. This trend is continuing in the start of this year. Meanwhile, La7 is also continuing to lose share. This could be supportive to the incumbents within the TV medium and may mitigate market share gains from DIiscovery / SwitchOver Media. However, our [source] believes La7 and Sky Italia’s market share losses mainly translate into higher discounting. This can also maintain pressure on TV prices in the near-term.”
As the bank mentions, there’s also a ‘new kid on the block’ in the shape of Discovery Communications which two weeks ago wrapped up a purchase of SwitchOver Media which operates four free-to-air channels in Italy (crime-orientated Giallo, male-skewed entertainment net Focus, plus two free kids channels, K2 and Frisbee. SwitchOver’s pay channel is male-skewed GXT). This move, says Morgan Stanley, “creates a credible alternative to Mediaset, RAI, Sky Italia and La7 – Our [source] believes the recent acquisition of SwitchOver Media by Discovery is positive for advertisers and negative for the incumbent broadcasters. Its advertising market share should reach between 7 per cent and 9 per cent in 2013. It will be about as big as La7 in terms of audience share, but with a much more attractive, more diversified audience mix and lower prices. Our [source] is expecting Discovery + SwitchOver Media will gain market share in 2013.”
Discovery’s Italian operation is headed up by its existing MD for Italy Milan-based Marinella Soldi, and besides its core pay-TV Discovery Channel brand, it also has Animal Planet, Discovery Travel & Living, Science and Discovery World.
Acquiring SwitchOver Media is the latest strategic move by Discovery in Europe, where it is increasingly targeting free-TV opportunities for growth. It launched female-skewing Real Time as a FTA channel in Italy in 2010 and added male-orientated DMax at the end of 2011. “Italy is a leading market for Discovery and key to our growth here over the last two years has been the development of a successful free-to-air TV business strategy as this platform has grown,” said Dee Forbes, president and MD of Discovery Networks Western Europe, talking to trade mag C21 Media.
The end result for Discovery in Italy is that it now controls 6 free to air DTT channels and 6 further channels on pay-TV.
Morgan Stanley’s report says the combined effect of this activity could propel Discovery significantly further up the revenue tables for Italian advertising – and putting pressure on pubcaster RAI, commercial operation Mediaset and La7. There’s another player, of course, in the shape of Google, which is believed to be Italy’s fourth-largest media owner.