Prime profits set to drop by nearly a third
Regional television player Prime Media Group has warned the market to expect a dramatic reduction in profits after experiencing a significant decline in advertising revenue.
The company, which carries Seven programming into parts of regional Australia, said it has seen a decline in revenues for the quarter in northern NSW, southern NSW and regional Victoria amounting to 7.4%. This was worse than a wider market decline of 6.8%.
The announcement said Prime expects its annual net profit after tax for the current financial year to fall to between $23m and $24.5m. This represents a drop of almost a third on last year’s $33.4m.
In the announcement, Prime CEO Ian Audsley suggested media agencies had been failing to back the company, despite Seven having the Olympic rights and performing better than its rivals.
He said: “The national agency revenue result is disappointing, particularly in an Olympic year in which Prime has grown its audience to a 41.8 share and delivered a market-leading 41.6 point revenue share. Olympic-related forward bookings have been encouraging; however, overall national advertising campaigns in regional markets remain challenged.”
Audsley warned that the looming election had added to uncertainties while consumer sentiment had contributed to a short term market.
He warned: “Current forward bookings suggest there will be no material improvement.”
The announcement came after the share market closed. But Prime (ASX:PRT) shares have already been languishing at historic lows, with the entire company’s market capitalisation now sitting at just $123m – a third of its value two years ago.
In another likely blow to the company’s share price when the ASX opens tomorrow, Prime Minister Malcolm Turnbull has signalled that the election is a virtual certainty for July 2, meaning that media ownership regulations will once again be postponed making an acquisition of the company less likely in the immediate future.
Tim Burrowes
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Oh dear!
Not looking pretty……good time to sell those shares Ian!!
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