TV One slashes rates for ads

Television New Zealand is slashing the price of advertising during prime time in response to falling ratings and a slowing economy.

Prime-time advertising rates on TV One for shows including One News will drop by 14 per cent on average for the first quarter next year.

Peak prices for TV2 - which is faring better than its sister channel in ratings - will drop 1 per cent on average for the period, according to the TVNZ quarterly advertising rate card released yesterday. The rate card showed the latest in a string of cuts to charges.

TVNZ's free-to-air rival CanWest MediaWorks will release prices for TV3 and C4 next week, but they are expected to be largely unchanged. Prime TV's plan, under new owner Sky TV, is set to follow a week later.

Ratings for One News have slipped in the past two years, particularly for Aucklanders aged 18-49, a group that appeals to many major advertisers.

Reducing advertising charges was partly aimed at turning around the state broadcaster's falling advertising revenue, which dropped by $9.4 million to $334.8 million in the year to June 30.

"We believe it presents an attractive pricing position for the market," said spokesman Robin Field.

Field said the drop in TV One's prime-time advertising charges reflected some "performance challenges" and followed several years of when the advertising market was buoyant.

The rate card reflected increased competition and was "realistic" in not expecting significant growth, he said.

"We believe we have taken a balanced approach reflecting the performance delivery of the network and the wider economic environment."

Martin Gillman, chief executive of media planning and buying agency Total Media, said TVNZ needed to price its product competitively and the fall reflected the marketplace, in which it had not performed as well as TV3.

Gillman expected CanWest would make few changes to its rates because of the flat advertising market.

"If there is a change I wouldn't expect anything more than a 2 or 3 per cent variation. That will be some zones up and some zones down."

Mitchell & Partners media director Phillip Hart said TVNZ had not cut prices enough.

"TV One have been steadily un-doing the increases that they put in the year prior but unfortunately the audience delivery of the channel has continued to trend down as well.

"I'm not sure they've been aggressive enough in the reduction in the TV One rate."

TVNZ had raised charges during peak times in February and March on TV2 after the success of shows such as Desperate Housewives, Lost and Grey's Anatomy.

But Hart said the 6 per cent rise for those TV2 slots would put them out of the range of many advertisers.

"They are getting so expensive that unless your target is absolutely perfectly suited to those, they're priced out of contention."

Off-peak on TV One, late-night rates dropped an average of 19 per cent, breakfast fell 10 per cent, and the periods between 9am and 4.30pm rose.

For TV2, off-peak advertising rates were hardest hit in the "hunger zone", between 5pm and 6pm, down 32 per cent on average and fell in every time zone except from noon to 3pm, where they rose 1 per cent.

TVNZ will confirm new season programming on November 1. CanWest will announce its lineup tonight and Prime TV at the end of this month.

Shares in CanWest MediaWorks yesterday closed up 2c at $1.45. Sky TV closed up 5c at $5.65.