The extent of Network Ten’s financial woes has been revealed in its end of year financial results listed on the ASX this morning with the company declaring a large tax loss and revealing proposals for a new $200m loan over four years.
Network Ten Holdings’ reported a loss of $285m in the 12 months to August 31. Although the company declared an operating profit of $46.1m, it declared one-off charges including a $292m writedown on the value of its licence and costs involved in making redundancies and restructures.
Excluding businesses such as outdoor company Eye which has since been sold off, revenues fell from $751m to $653m. This number was actually a slight improvement on what the market had anticipated after heavy government and political spending in the run-up to the election increased ad spend across the TV industry.
Ten revealed that its three biggest shareholders – Bruce Gordon, chairman Lachlan Murdoch and James Packer – have guaranteed a proposed $200m financing facility from the Commonwealth Bank of Australia that will be delivered over four years.
The loan follows two previous rounds of capital raising from shareholders.
The network said it had cut costs by 8 per cent during the financial year.
The network has been through a disastrous couple of years, with ratings and revenues collapsing and the ousting of CEO Grant Blackley in 2011, then his predecessor James Warburton earlier this year.
Ten CEO Hamish McLennan said: “The board and management of Ten recognise time and financial investment are required to build ratings and revenue, which is why a new financing facility is proposed.
“Ten’s turnaround continues to be strongly supported by its major shareholders. Ten would not have been able to access this source of finance from the CBA on such favourable terms without the support of our major shareholders who are providing guarantees.
“Ten will have flexibility to implement the turnaround. Our strategy will be measured, prudent and consistent.”
The network’s strategy to boost ratings revenue and earnings over the next year includes delivering premium sport content as well as the investment in a new breakfast and morning television line-up developed by Ten’s new director of morning television Adam Boland.
Additional measures aime dat turnign around the network’s fortunes include a restructure of the sales department and launch of the network’s online catchup TV service tenplay.
“Ten’s management needs to focus on investing in its strategy to build ratings, while maintaining cost disciplines in other departments,” McLennan said.