Ten reports $264m loss but claims ‘best start to ratings year since 2012’

TenTen has seen first half losses slide to $264m, after reporting an $8m deficit the previous year, with chief executive Hamish McLennan blaming the 2014 business restructure for the result.

But the network said it had enjoyed its best start to a ratings for three years, with a consistent uplift in audiences and a rising share of TV advertising revenue, crediting the launch of three shows this year – Shark Tank, I’m a Celebrity and Gogglebox Australia – for the improvement.

The result was mainly impacted by a write down on the value of the TV licence of $251.2m, although TV revenue also fell in the period, from $315m in 2014 to just under $310m, while TV earnings before interest, tax, depreciation and amortisation fell from $10.1m to $7.5m.

Earlier this week Ten confirmed it was in talks with Foxtel over the pay-TV company taking around a 14.9 per cent stake in the business.

On that issue Ten reiterated a statement released earlier week which said its strategic review process was on-going and “may or may not result in a transaction which is acceptable to Ten”.

McLennan said the results reflected the “restructuring the business had undertaken in 2014 in order to reduce costs and invest in prime time programming”.

The company said it has drawn $105m of its $200m debt facility and “will operate within the limits” of its financial structure

But it also warned that if revenue declines “due to television advertising market volatility or an adverse impact on the group’s market share” these cash flow forecasts may not be achieved.

“If this was to occur the group will need to take appropriate actions including raising debt or equity funding should that be required in order to continue to operate within its existing $200m funding facility,” Ten said.

“As a result of these matters there  is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.”

McLennan, however, talked up Ten’s recent performance, insisting it’s strategy to draw in a younger audience was working.

“Network Ten was the only commercial network to increase its people 25 to 54 and total people audiences during the 2014-15 summer and achieved a 24.7% revenue share in January 2015,” McLennan said.

“Since the start of the 2015 ratings year on February 8, Network Ten is the only commercial network to increase its 25 to 54s and total people audiences, with growth of 25% in 25 to 54s and 22% in total people.”

But he said the outlook remained hard to predict, describing forward bookings in the TV advertising market as “short”.

McLennan said Ten remained committed to its key strategic aims – outlined at the end of 2013 – to create content aimed at the 25 to 54 year olds, develop new formats and keep a tight grip on costs.

hamish-mclennan“We are on strategy and we have also given viewers and advertisers greater consistency in how we schedule our content across three channels, and we continue to focus on the expansion of the tenplay digital platform,” he said.

McLennan said Ten’s share of the capital-city television advertising market was trending higher, with 20.9 per cent achieved in the six months to February 28, and a 21.8 per cent share in March.

“We saw strong revenue growth from the KFC T20 Big Bash League during the 2014-15 summer and our focus on other premium live sport properties is generating incremental revenues from V8 Supercars, Formula One and Rugby Union,” he said.

“Sponsorship revenue for key series to come across the rest of 2015 – including MasterChef Australia, The Bachelor and TBL Families – is also very encouraging.”

Its catch-up and streaming service Tenplay has also continued to increase its audience and advertising revenue, he added.

The network said more than two million Tenplay mobile apps have been downloaded since its launch in September 2013.

Despite admitting that forward ad bookings were “short” McLennan defended TV, noting the recent debate about its future.

“The fact is that no medium can match free-to-air television’s ability to reach large audiences every day and night of the week,” he said.

“Of course, some other media’s share of consumers’ time and the total advertising market has increased in recent years, but the vast majority of marketers know television advertising works better than any other form of advertising.

“Ten is constantly finding new ways for advertisers to deepen their engagement with our viewers. We are also taking our content to where people want to view it, via tenplay and other digital media initiatives.”

The Ten boss also welcomed the Federal Government’s recognition that TV licence fees should be reviewed.

McLennan described them as “by far the most punitive in the world”.

“Paying licence fees on top of corporate tax and increasingly onerous Australian content obligations is unreasonable,” he said. “Every dollar we pay in licence fees is a dollar we cannot spend on local content,”

He again called on the Government to “urgently consider” proposals to reform media ownership rules.

“The two-out-of-three rule and the audience ‘reach’ rule are hurting Australian media companies by inhibiting our ability to grow and compete,” he said.

“However, piecemeal reform, such as only removing the ‘reach’ rule, will make the situation worse. Allowing some companies the opportunity to pursue consolidation while continuing to restrain others will exacerbate the damaging impact of the remaining rules.”

Steve Jones


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