Ten posts $7.9m loss for first half with McLennan admitting programming needs to improve



Network Ten has posted a $7.983m loss for the first six months of its financial year, as its earnings before interest, tax, depreciation and amortisation (EBITDA) collapsed from $34.9m to $10.056m in the comparative period to February 28 with CEO Hamish McLennan admitting the programming and content on the main channel “needs to be improved.”

Although on paper the loss for this year looks better than the $243m loss recorded for the corresponding period last year, that number included a substantial voluntary write-down of the value of its TV licence.

In its report released to the Australian Securities Exchange this morning the broadcaster says it has already used $55m of a $200m loan taken out in September with the backing of its major shareholders. It also shows while TV revenues grew $28m, around 4.4 per cent, costs were $38m higher (8.8 per cent up), an indication the network lost money on its investment in the Big Bash Cricket and Sochi Winter Olympics.

McLennan blamed higher programming costs and slow TV ad revenue market growth adding: “Our television revenue growth was ahead of the growth rate for the capital-city free-to-air television advertising market during the six months to February 28.”

The results come despite Ten posting its strongest summer ratings since 2008, with The Big Bash cricket and Winter Olympics in Sochi pulling in decent audiences. In recent weeks audiences for the network have collapsed, posting a series of record low audience shares.

“Our general entertainment programming on the main channel has underperformed badly since the end of the Winter Olympics. We failed to capitalise on the momentum generated by the Big Bash League, and the Sochi Winter Olympics and the results from our general entertainment lineup have been disappointing,” McLennan told an investor briefing today.

“Part of the problem has been ageing program franchises,” McLennan said, adding this will be addressed as production agreements expire over the next 12 months. Ten’s production and programming department are also working to secure “fresh formats that can be produced locally at competitive prices”.

The Ten CEO and chairman also pointed to the higher programming costs for under performing Wake Up and Studio 10 morning shows launched last November as reasons for this.

He added: “Strict cost control is part of Ten’s DNA and we will continue to find new ways to work smarter and more efficiently. At the same time, we will make prudent and strategic investments in content to execute our turnaround strategy.”

McLennan said the network will invest in local content and told shareholders the network was looking at more economical formats.

However following poor ratings for its dramas Puberty Blues and Secrets and Lies, McLennan said it is critical Ten improves the scheduling and marketing of its shows and will look at ways to supplement existing resources in its scheduling department as well as promoting and marketing content more effectively and consistently.

“What is critical is fixing our general entertainment content and scheduling,” he said. “The Big Bash and Sochi Winter Olympics show that when we have good content that is marketed and promoted well, the viewers will come. At the same time we will continue to add more talent to our business both on and off screen.”

Since taking on the dual role of CEO and chairman a fortnight ago, following Lachlan Murdoch’s departure, and after today’s announcement CFO Paul Anderson would also be COO, McLennan said finding new talent for the management team is challenging.

“In this industry, and this country, the good talent is either locked up or they are few and far between,” he said. “With Peter Meakin we were able to pick him up, but it took time. We’re opportunistic so we’re always looking at ways in which we can supplement the senior management ranks of the business and will add to that team as we go forward.”

Those comments come after veteran programmer John Stephens opted not to join ten from rivals Network Seven, leading to a court battle over his employment. 

Today’s results show the network now has $19.5m of cash or cash equivalents versus $122m last year.

However, in a statement he said the company was committed to its live sport and event TV strategy, adding: “We have consistently said that it will take time to improve Ten’s ratings, revenue, earnings and returns to shareholders. We remain committed to improving the nature of our existing agreements with various content partners.

“Our sport, evening news and current affairs programs are performing well, along with the Eleven joint venture, One and our day time program schedule. But the Ten channel’s general entertainment content and scheduling has under-performed and needs to be improved.”

He added: “It’s a balancing act where you need to invest in content to drive the ratings, but Ten has always been known for it’s cost focus and that will continue in the short to medium term.”

Shares in Ten are trading at around 26c, giving the company a market capitalisation of $672m and no interim dividend will be paid to shareholders.

Alex Hayes & Megan Reynolds


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