Prime Media Group has wiped off $122 million from its corporate value and suffered declines in revenue and profit as declining regional television audiences and advertising dollars take their toll.
Prime's 2016 financial results revealed a 7.7% drop in revenue to $238.8 million and a 17.1% decline in profitability (EBITDA).
The write-down, which adjusts the company's goodwill and value of its TV licences, contributed to a net loss of $93.5 million in the past year, but will not breach the Prime's banking covenant - the conditions on which it can lend money from the bank.
Prime isn't the only TV network to write-down its value in recent times, but this is another sign the regional affiliate business model will struggle to remain viable without changes to ownership rules being considered in Parliament.
Compounding the problem is increased competition from unregulated SVOD players like Netflix, Stan and Presto as well as other content delivered to households via internet streaming.
“This adjustment reflects the impact of new and largely unregulated market entrants, increased competition for audiences from global and Australian media platforms, and the comprehensive reach of the internet streaming services. All of these factors impact regional television audiences,” Prime Media Group CEO Ian Audsley said.
“We are pleased to have outperformed guidance provided to the market in April this year, particularly given the established difficulties in the regional television advertising market, which were further compounded by the uncertainty of network affiliation changes for our two main competitors.”
Audsley said that Prime had increased its share of audience and revenue among regional rivals.
However, the stark reality is that regional television audiences are in decline - down 12.3% in the past year – and changes to Australian media ownership laws, in particular the 75% reach rule, can't come soon enough.
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