1. Using the appropriate tool or framework, analyse the macro environment experienced by Channel 7 at the time and from this analysis identity opportunities for growth, and threats to Channel 7 (50%).

2. Discus Channel 7's business-level strategy in 2016 (25% of question 2) and identify and discuss the Resources and Competences which provide Channel 7 its competitive advantage in 2016 (75% of question 2).

10 1 5 6 1 7 In 2016, Channel 7 was the most successful of the 5 commercial broadcasters in Seven West Media share price ($) Australia in terms of population reach. 45 producing content and broadcasting for 4.0 different audience-targeted channels. Owned 315 by Seven West Media, it was having one of 3.0 25 its most successful years yet having 2.0 achieved its largest ever lead in ratings in 1.5 total people and every other key demographic. It had reduced underlying 0.5 operating costs by 1.6% since the previous 2011 2012 2013 2014 2015 2016 year; launched live streaming 24/7 across all Figure 1: Seven West Media Share Price Decline (Source channels (Plus7), delivered over 65m Bloomberg) The television advertising market was streams and secured a reduction in FTA decreasing in profit, and new online license fees. Positioned at number one of the media was proving attractive to TV advertising market for revenue and advertisers. There was also the ratings and with its Commercial Advertising possibility of changes to the funding Video on Demand (AVOD) catchup service status of rival Public channels SBS developed in partnership with Yahoo Hybrid-funded with 80% coming from (Yahoo 7) also number one, Channel 7 were public money) and publicly-owned hitting many of their strategic targets. ABC. Channel 7 needed to develop a strategy to address these issues. The main source of Channel 7's revenue in 2016 came from advertisers, having Up until 2016. Channel 7 had gained its captured 38.9 per cent share of strong position through a blend of content. advertising, marking a decade of revenue broadcasting reach and adverusing power leadership compared to their Commercial As an integrated producer broadcaster rivals Channel 9 and Network 10 Channel 7 created value from content that However, nationwide television it developed, owned and distributed advertising decreased 2.0 per cent in the around the world. The company w same period (based on Free TV data) characters Converted1 English (Ireland) TextSection, Outline 1 11"C Mostly cloudy10 In 2016, Channel 7 was the most successful of the 5 commercial broadcasters in Seven West Media share price ($) Australia in terms of population reach. 45 producing content and broadcasting for 4.0 different audience-targeted channels. Owned 35 by Seven West Media, it was having one of 3.0 25 its most successful years yet having 20 achieved its largest ever lead in ratings in 1.5 total people and every other key demographic. It had reduced underlying 0.5 operating costs by 1.6% since the previous 2011 2012 2013 2014 2015 2016 year; launched live streaming 24/7 across all Figure 1: Seven West Media Share Price Decline (Source Bloomberg) channels (Plus7), delivered over 65m The television advertising market was streams and secured a reduction in FTA decreasing in profit, and new online license fees. Positioned at number one of the media was proving attractive to TV advertising market for revenue and advertisers. There was also the ratings and with its Commercial Advertising possibility of changes to the funding Video on Demand (AVOD) catchup service status of rival Public channels SBS developed in partnership with Yahoo (Hybrid-funded with 80% coming from (Yahoo 7) also number one, Channel 7 were public money) and publicly-owned hitting many of their strategic targets. ABC. Channel 7 needed to develop a strategy to address these issues. The main source of Channel 7's revenue in 2016 came from advertisers, having Up until 2016. Channel 7 had gained its captured 38.9 per cent share of strong position through a blend of content advertising, marking a decade of revenue broadcasting reach and adverusing power leadership compared to their Commercial As an integrated producer broadcaster, rivals Channel 9 and Network 10 Channel 7 created value from content that However, nationwide television used 2.0 per cent in the developed. owned and distributed advertising decreased 2 around the world. The company was same period (based Free TV data) characters Converted1 English (Ireland) TextSection , Outline 1 11"C Mostly cloudAssignment 2022-23 MG3103(3) (2).door - Neat Office Writer Format Styles Table Form Tools Window Help Times New Roman 115 ~ B /US XX2 4 2 - 10 9 1 8 7 16 15 4 2 3 14 5 The main source of Channel 7's revenue in suaregy to audress wiese issues. 2016 came from advertisers, having captured 38.9 per cent share of Up until 2016, Channel 7 had gained its advertising, marking a decade of revenue strong position through a blend of content, leadership compared to their Commercial broadcasting reach and advertising power. rivals Channel 9 and Network 10. As an integrated producer/broadcaster, Channel 7 created value from content that However, nationwide television it developed owned and distributed advertising decreased 2.0 per cent in the same period (based on Free TV data). around the world. The company was expanding its presence in the further Worth more than $3 billion in 2011, Seven delivery of its video and publishing West Media's market capitalisation had fallen to $1 billion by end of the 2016 content beyond its digital broadcast channels and across an array of platforms, financial year (as per Figure 1). While specifically Plus7. Channel 7 had also program sales and third-party productions secured a presence in Subscription Video were up 92% the underlying profit after on Demand (SVOD) through its Presto tax of$207.3m was down 0.9% Year on joint venture with Foxtel, one of Year (Yo Y) while Earnings Before Australia's leading pay TV providers. Interest and Taxes (EBIT) totalling $318.1m was down 10.7%. Seven West Channel 7's production arm. 7Productions. Media was also hampered by carrying was the largest producer of content in billions in debt. Australia, creating, commissioning and producing over 670 hours of content in 20 16 and recognised as a leader in the production of scripted. entertainment. reality, observational documentaries and children's programming. Production was expanding via existing partnerships in Beyond, and 7Wonder, which provided Page 5 of 10 words, 20,260 characters Converted 1 English (Ireland) TextSection, Outline 1Times New Roman 11.5 BIUSXXHEY 10 9 6 14 innovative new local and international world's largest VOD provider with 42 commissions through a global network in million subscribers, capitalised at $33bn, the development, production and in 2015 was significant for Channel 7's distribution of content. The quality of this own online Video on Demand (VOD) content, in addition to significant long- service. In 2006, Channel 7 had term partnerships with the Australian announced its partnership with Yahoo - a Football League and the International new 50-50 digital business known as Olympic Committee, attracted commercial Yahoo 7. The deal was initially helpful audiences that subsequently drove with providing technology and building advertising revenue. It had made some audience. In 2015, Channel 7 revamped mis-steps in the past, one of the most and relaunched its Broadcast VOD notable being the cancellation of the soap services, where consumers could live opera Neighbours which was stream channels and catch up on broadcast commissioned by Channel 7 in 1985 but TV via the internet. The problem for cancelled within 4 months due to poor Channel 7 was that until 2017, its BVOD performance in the Sydney market. service Plus7 continued to be a joint- Immediately commissioned by rival venture with Yahoo, which saw half ofits Network 10, it went on to become the growing online revenue sent to Yahoo. In longest-running drama series in Australian the same year, Channel 7's main rival television history and has found a Channel 9 also launched its joint venture significant overseas audience. streaming service called Stan Outside of the television market, different By 2016, the internet (43 2% market share) entertainment platforms such as online TV had overtaken television (22.8%) as the and internet had been growing rapidly in biggest advertising platform in Australia (as Australia by 2016. The Traditional TV per Figure 3). broadcasting industry market was becoming saturated and slowing down. Commercial television in Australia was reaching 85.1% of the population aged over 13 years old (down from 93.1% in 2008) with viewershin decreasing fastest 2 words, 20,260 characters Converted1 English (Ireland) TextSection , Outline 1 11"C Mostly cloudy searchTimes New Roman 11.5 BIUSXXIZEPIE 6 12 13 14 15 1 6 and internet had been growing rapidly in Australia by 2016. The Traditional TV biggest advertising platform in Australia (as per Figure 3) broadcasting industry market was becoming saturated and slowing down. Commercial television in Australia was reaching 85.1% of the population aged over 13 years old (down from 93.1% in 2008) with viewership decreasing fastest in viewers aged under 50 (as per Figure 2) Figure : 2016 Advertising spending in Australia by platform. source statistics In terms of other resources, investing in a portfolio of channels and digital assets to reach all demographics also extended the brand. Human resources were supported through training and development. Channel 7 had high quality production Figure 2: Increase in number of people who capabilities and owned several production watch no television, by age range companies and studios. They also purchased content from external studios. This was attributed to a tougher and more Content, advertising, and broadcasting competitive environment brought about by were of central importance to Channel 7 Video on Demand (VOD) and streaming giving it advantages over Commercial services. The arrival of Netflix, the competitors with strong content and Page 6 of.10 TextSection , Outline 1 s, 20,260 characters Converted1 English (Ireland) 11 C Mostly cloudy chIs Assessment Assignment 2022-23 M63103(3) (2).docx . Neat Office Writer View Insert Format Styles Table Form Tools Window Help Times New Roman|115 - | B / US X X43 SITE-ZZ 10 9 J.E. Cairnes School of Business & Economics broadcasting variety but less advertising commercial broadcasters such as Channel revenue and Netflix with much less 7 for advertising revenue. On a more content and only one distribution medium. positive note, the Australian Government was debating a series of reforms to It also expanded its presence in new Australia's media laws including the businesses beyond its core strengths in Broadcasting and Content Reform media to include a portfolio of companies Package. The rules in 2016 restricted such as Airtasker (local trades and services traditional media companies from marketplace), Society One (peer-to-peer optimising the scale and scope of their lending), HealthEngine (health service operations and from accessing resources, marketplace), Newzulu (UGC content capital and management expertise in other management), Nabo (social network). media sectors. While these laws have been Starts at 60 (online community for a 60+ adjusted over time in an attempt to audience) and MediaBeach (News accommodate changes in technology and Exchange Platform). media consumption patterns, more fundamental reform was considered Legislatively, there was also active public necessary in 2016 to support the viability debate about whether SBS and the ABC of domestic media organisations in the should receive less public funding, which face of increasing global competition in a would force them to compete with rapidly changing digital landscape. 3,082 words, 20,260 characters Converted1 English (Ireland) TextSection , Outline 1