Ten slumps to $264m loss despite ratings growth

James McGrath
By James McGrath | 30 April 2015

Network Ten has slumped to a $264.4 million first half loss on the back of a television license impairment of $251.2 million, but its revenue was also down on the previous corresponding period.

It told the Australian Securities Exchange this morning that it had booked TV revenue of $309.8 million before taxes for the first half to February 28, down on the previous corresponding period's figure of $315 million.

It also booked earnings before tax of $7.5 million, down from $10.1 million.

This was despite a growth in ratings over the corresponding period.

It said that it had its best start to a ratings year since 2012, the only network to grow its share in the 25-54 market, up 25%.

Ten CEO Hamish McLennan told the market that the result was reflective of a restructure to reduce costs, pointing to a 2.1% decrease in costs during the period arising from a restructure in its news operations.

While Ten is placed to operate within a $200 million funding facility, it admitted that volitility in the advertising market could have dire consequences.

“If this [further volitility] 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,” it 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 and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.”

Ten said nothing in particular had changed for it issue the warning to investors, and also pointed to the increasing number of people using its catch up service, Tenplay.

It said that more than two million mobile apps had been downloaded, and the service attracted 14.6 million unique visitors, a 23% increase on the previous corresponding period.

Advertising revenue from the Tenplay service was also up 29% during the period.

However, McLennan said the TV advertising market remained short while buyers waited to see whether the momentum built on early ratings wins, including the Big Bash League and I'm a Celebrity, carried out to the middle of the year and beyond.

“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,” McLennan told investors.

Its net debt is sitting at $92.3 million.

On advertiser relations

Ten CEO Hamish McLennan said that advertisers and buyers were now much more eager to talk to the network than they were 12 months ago.

“I've been very encouraged about the dialogue we've had with advertisers and media buyers about our shows and the integration opportunities within that,” McLennan told analysts this morning.

“There's certainly a greater willingness to talk to Ten than there has been in the previous 12 months.”

However, he said that networks needed to stick up for themselves in negotiations.

“There needs to be better pricing integrity in the way we trade from our point of view, and I think David [Gyngell] and Tim [Worner] will agree with that.”

On sports rights

McLennan said that the network would need to get creative to secure either NRL or AFL rights, but admitted the network is suffering without a winter sporting code.

“Our negotiations don't have to be absolute … we don't have to trade for everything,” McLennan said.

“We are flexible and that's the approach we'll take with any rights. We have suffered without a winter sport, and we'll see what we can get out of AFL and NRL.”

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