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Agency’s sale creates movie monopoly

SOME of the sparkle fell from the silver screen in Australia last month following the successful bid by Television & Media Services for the Media Entertainment Group, effectively creating a monopoly in cinema advertising.

Television & Media Services, owner of Val Morgan, is currently holding a review of the MEG offices around Australia and there have been a number of job losses, including staff from the Perth office.

“We are currently conducting a review to see where there is duplication and replication of activities, and during that review we’ll come to some conclusions,” Television & Media Services chief financial officer Ross Pearson said.

Although screen advertising represents only 3.1 per cent of the total cinema revenue, figures released by the Australian Bureau of Statistics indicate operating profit before tax has slipped 5.5 per cent in the past three years.

The move has created a one-stop shop for screen advertising, leaving cinemas with very little room to move when it comes to renegotiating their advertising contracts.

ACCC director of public relations Lin Enright said the ACCC looked at the screen advertising market and considered that, in the broader context of advertising, there were very low barriers to another player entering the market.

In the bigger picture, the ACCC believed screen advertising was too small to be considered independently, so there were no objections to Val Morgan’s bid for MEG.

“Cinema advertising was just too small in the wider range of advertising,” Ms Enright said.

There are currently 150 cinema screens in Perth generating gross box office receipts worth $71.9 million, with on-screen advert-ising worth $32.5 million nationally.

Former MEG state manager Don Mc-Kenzie said the cinema advertising market had been quite slow and small businesses that had been hard hit by quarterly payments were unable to commit to the long-term campaigns utilised in the cinema.

“Things have got worse this year. When you look across the country there’s been a drop in cinema advertising of about 30 per cent,” Mr McKenzie said.

Luna Palace managing director Ingrid Vandenberghe said cinema advertising businesses, like Val Morgan and MEG, paid a negotiated fee to the cinemas to screen their clients’ advertising material.

Ms Vandenberghe said although the revenue from screen advertising was not huge, it was part of their business and was a steady and important source of income.

“I reckon this sucks big time. How do you negotiate when you can’t play one company off against the other,” Ms Vandenberghe said.

“It’ll be a shame if we can’t negotiate the same deal. All our cinemas are with MEG at the moment.”

There’s nothing stopping anyone from entering the market at the moment and it is a very international business, according to Hoyts general manager community matters Tony Murray.

“It’s part of our business, there’s no quest-ion about that. And on a long-term basis we’d look at it as a revenue flow,’ Mr Murray said.

Although screen advertising remains quite strong, with more screens opening the potential revenue will start to thin out.

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