Nine Entertainment stands to lose almost $100 million a year if it scraps its affiliation with regional TV stations, Prime Media chairman and former News Limited boss John Hartigan says.
Mr Hartigan has attacked Nine's chief executive David Gyngell, who says regional broadcasters will be redundant in five year's time because their big city counterparts will stream programs directly into country Australia via the internet.
Mr Hartigan said Mr Gyngell's plan was "half-baked" and would erode Nine's shareholder value.
"Nine cannot stream its entire television schedule over the internet because it does not hold the digital rights to some of its tent pole products, particularly NRL and cricket, so it'll be a half-baked offering," he said.
"If Gyngell's suggestion is that he'll stream over the top of his regional affiliates and he does so without NRL and Cricket, he'll lose millions of dollars in revenue that he would otherwise receive from his broadcast partners in regional Australia – impacting its top and bottom lines and Nine's shareholder value."
Mr Hartigan said he did not know how much affiliate revenue Nine received from WIN and others, but he estimated it would be "in the order of $90 million" a year. WIN declined to comment.
"It'll be a magician who can replace almost $100 million in earnings by streaming a half-baked TV offering to regional Australians".
Mr Gyngell said after Nine's annual meeting on Wednesday that he was no longer lobbying for repeal of the 75 per cent reach rule that prevents metropolitan broadcasters from taking over the regional affiliates, saying it would be redundant as viewers watch more television over the internet.
"Everyone watches streamed contents these days. If you can watch it from America, trust me, you can watch it from Wagga," Mr Gyngell said.
"In five year's time we will just go around regional television and stream our content into those markets. We ultimately won't have a regional affiliate deal."
When asked if Mr Gyngell was deliberately talking down the regional TV business so he could eventually buy them if the government scraps the reach rule, Mr Hartigan said "that's 100 per cent right".
"If it's possible for someone in America to deal with someone in Wagga, then this threat applies equally to capital city broadcasters," he said.
Fairfax Media has approached Nine for comment.
Mr Hartigan called on the government to scrap the reach rule, which he said had become redundant, considering the ABC and Foxtel had total reach across the nation, and, through its regional affiliates, so did Nine News.
"The Chairman of Nine, David Haslingden said it was 'ironic' that Nine is only allowed to broadcast Nine News directly to 75 per cent of the population," Mr Hartigan said.
"That remark fails to acknowledge that Nine's television news reaches 100 per cent of Australians via its regional broadcaster affiliations, making a joke of the audience reach rule, the one to a market rule and the voices test."
