Ten issues warning on earnings as predictions fall $10m – $15m short
The Ten Network has issued a warning that its earnings before interest, tax, depreciation and amortisation are expected to fall short of its projections from December by as much as $15m as the advertising market weakened.
Ten CEO Paul Anderson says industry is “under severe duress”
The warning, announced to the Australian Stock Exchange, comes just a day after Seven West Media announced a 90% crash in profits.
Ten predicted at its AGM in December 2016 that it expected TV revenue would be up 1.2% to the half year on February 28, 2017.
However, it said the weak advertising market and increased content and other costs would result in earnings before interest, tax, depreciation and amortisation “are expected to be $10m to $15m lower than the $10.1m EBITDA profit reported for the previous corresponding period, resulting in an EBITDA loss of $5m.
Increased content costs were one of the triggers to Ten’s earnings warning
Ten CEO Paul Anderson said the downgrade came despite a “rigorous” cost reduction process, which remains underway.
“This industry is obviously under severe duress and yet the commercial free-to-air television broadcasters continue to be penalised by the world’s most expensive broadcast licence fees,” Anderson said.
“Without the investment of the commercial free-to-air broadcasters, local production will dry up, jobs will be lost and local news will be a thing of the past.
“As we have been saying for years now, the current regulatory framework is unsustainable. Without an urgent reduction in licence fees to the levels paid overseas, and without reform of Australia’s archaic media laws, this sector faces a very uncertain future.”
Anderson has used the market warning to call on the Federal Government to move swiftly on media reform.
“It is time for the Government to face the reality that the world has changed,” he said.
“Australian media companies are competing directly for viewers and advertisers against globally dominant internet companies that are taking a growing share of advertising dollars out of this country. These companies are exempt from local media regulation or content obligations, and they don’t pay television licence fees.
“We are calling for urgent action from the Government and the Parliament to ensure a future for the high-quality, free television service that Australians highly value and rely on.”
Anderson’s call mirrors a similar call made by Seven West Media yesterday which predicted the Federal Budget would have media reform as a major announcement.
Ten’s warning comes a day after SWM reported a drop of 90% in half-year profits, which prompted the market to wipe 5.5% of the value of the company.
Impacts from the closure of Presto and write-downs on its Yahoo7 investments contributed to the drop.
Anderson’s warning about the weak market and short term bookings is counter to comments from Seven’s embattled CEO Tim Worner, who told analysts the media company was seeing a return to longer term books and that the company was seeing growth in February and March for the first time since 2014.
DejaVu — this is exactly what happened across the Newspaper Industry 10 years ago (and is still happening). Broadcasters, Buckle in for a very rough ride ahead
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Yeah yeah, times ARE difficult but poor old TEN is still recovering – or possibly not recovering – from the insane management(s) of the past ten years.
What to do now – stay with News and cut everything back to running Fox programming and Sky News – or sell to Bruce Gordon (which might be a better option)?
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How many tenants do you know that have demanded their rent be reduced? How many tenants do you know who have banded together to get their rent cut?
The broadcasting spectrum is owned by the people of Australia. Users pay a licence fee for its usage, or what is in effect the rent of that spectrum.
Every cut in their rent comes out of your pocket.
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Arrogance leads to poor results. You only have to spend 30 minutes with a senior FTA TV Exec to know this and where their industry is heading.
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