Nine, Ten to swap affiliate partners

WIN Corporation and Ten Network Holdings are poised to sign a television affiliate deal as soon as this week.

If Ten pushes WIN too hard on affiliate fees, Bruce Mr Gordon might decide to shut it down

Bruce Gordon’s WIN Corporation and Ten Network are poised to sign a television affiliate deal as soon as this week, in the aftermath of a shock agreement between rivals Nine Entertainment and Southern Cross Austereo.

Regional television network WIN has been in affiliate negotiations with metropolitan broadcaster Ten for more than a month, as revealed by The Australian, and a deal is now considered a near certainty.

WIN is currently aligned with Nine, while Ten has a long-term deal with Southern Cross, but the networks are set to swap partners from July 1.

Nine ditched WIN to sign a $500 million, five-year deal with Southern Cross on Friday in what has been viewed as a precursor to a merger that would redraw the Australian media landscape.

Southern Cross will pay Nine an affiliation fee of 50 per cent of its TV revenues, up from 34 per cent under the current deal with Ten.

It’s believed Ten is likely to accept a deal with WIN for less than 40 per cent of its gross revenues in exchange for the metro network’s content, including programs The Bachelor, MasterChef and I’m A Celebrity … Get Me Out of Here.

If Ten pushes WIN too hard on affiliate fees the regional business would become unprofitable and Mr Gordon might decide to shut it down, leaving the metro network with nothing.

Friday’s affiliate deal came after Nine acquired a 9.9 per cent stake in Southern Cross in March.

While a merger between the two companies has been widely speculated for more than three years, the timing and execution of the affiliate deal appear to have caught WIN and Ten off guard.

WIN’s current six-month deal with Nine was signed on New Year’s Eve, just hours before the signal was due to go black in regional areas.

Industry observers believed new affiliate deals would be struck at the eleventh hour towards the end of June when the two current agreements are due to expire.

Southern Cross will see a big uptick in TV revenues from broadcasting Nine’s content, which attracts higher ratings than Ten, but the majority of the sales boost will be offset by higher affiliation fees and the costs of switching signals, according to Deutsche Bank analyst Entcho Raykovski.

The analyst estimated Southern Cross would reap a $50m-$60m revenue uptick but only a 3 per cent lift in group earnings, which were skewed towards the company’s radio assets.

It’s understood the affiliate agreement also includes a ­commitment by Nine to advertise with Southern Cross’s radio ­businesses, which include the ­Triple M and Hit metro networks, as well as collaboration on ­regional news services. Southern Cross is affiliated with Seven West Media in Tasmania and does not have licences in Western Australia.

Nine would be reliant on WIN taking its signal in those areas, and could be relegated to the regional network’s West Digital Television, which is a joint venture with Prime Media Group.

Sources said Nine could forgo as much as $12m in affiliate fees if it was relegated to WIN’s supplementary licences in WA, Tasmania, Mildura, Griffith and South Australia.

Sources close to Nine believed the figure was lower and said the network had budgeted for the potential impact of WIN not taking its signal in these areas.