Ten reports woeful loss on writedowns

Rose Major

Australia’s Ten Network Holdings Ltd, which operates the Ten Network among other assets, has reported a A$79.7 million loss for the six months to the end of February, hit by writedowns in the value of some assets. The loss compared with a A$270.5 million profit in the same period the previous year.

Although TNHL said the year-ago period included a one-off tax gain of A$183.7 million, the loss for the period is in stark relief to the previous year and demonstrates just how sharply the bottom has fallen out of the Australian ad market. The normalised net profit of A$56.8 million was still down 35% on the previous year.

The majority of the writedown, A$122.9 million, is in TNHL’s Out-of-Home advertising business. But the company is also writing down A$15.5 million in the television segment “in relation to the writedown of program rights and an investment”, TNHL’s results statement said.

But there were some pieces of good news from Ten. First, the company’s new digital-terrestrial sports channel, One, will only cost the company A$20 million a year to operate and is expected to break even within its first year of operation.

Second, operating costs have been cut. In TNHL’s television segment, costs fell from A$284.8 million to A$276.9 million (although that 3% fall was lower than the 12% fall in revenues). Executive chairman Nick Falloon said full year costs would also be lower.

But Ten is promising cost cuts will not affect the quality of the network’s programming. CEO Grant Blackley said: “We are looking at costs diligently, but we will be protecting on-screen activity.”

Total revenues fell 11.2% to A$467.6 million. TV revenues were down 12.2% to A$380.9 million. TV EBITDA was down 28.1% to A$114.2 million with group operating earnings falling 27.4% to A$118.9 million.

Ten is backed by troubled Canadian media company CanWest, which is seeking to refinance its debt.