By Kirsty Simpson
Ten Network said its first-half profit fell 70 per cent from a year earlier as a weak advertising market took its toll, as the broadcaster reports its first results under new chief executive James Warburton.
Australia's No. 3 TV network said profit for the six months to the end of February fell to $14.8 million.
Ten needs to focus on rebuilding its profit.Credit: Louise Kennerley
The earnings announcement comes as the company continues to face a poor showing in the television ratings and a decline in its advertising share - taking only one quarter of the revenues booked through agencies, compared with shares of about 33 per cent for Nine and 40 per cent for Seven.
Ten's share register includes some of Australia's richest magnates, with Gina Rinehart, Lachlan Murdoch and James Packer all owning substantial stakes in the network.
Vision and patience required ... Channel Ten CEO James Warburton.Credit: Tomasz Machnik
Ten shares were hammered when the broadcaster warned of falling profit and sales, losing about 10 per cent of their value in minutes. Ten stock rebounded after an early slide sent the shares to a three-year low of 72.5 cents. They closed 2 cents higher for the day, or 2.6 per cent, to 78 cents.
The network's sales for the half year fell 10.9 per cent to $432.7 million, dragged down by soft demand from advertisers.
The profit result was well below market consensus of $22.6 million, according to a median of six analysts’ forecasts gathered by AAP.
Soft markets
"Advertising markets were soft, particularly in late 2011 and early 2012,'' Mr Warburton said in a statement. Mr Warburton took over the helm at Ten on January 1.
"The difficult state of advertising markets is reflected in our results for the six months to February 29," he said. "These results, however, reflect the benefits of the operational and strategical review that took place last year, in particular around cost disciplines and the ongoing efforts to create a strong platform for Ten Holdings.''
Finance costs for the half year rose from $16.7 million to $20 million. Television costs, though, fell 2.4 per cent, and Ten expects to shave them by 5 per cent, or $30 million for the full year.
"Ten Holdings' cost base has been reduced. The evening news and current affairs strategy has been refocused. ONE has continued to show strong audience and revenue growth since it was relaunched on May 8 last year," Mr Warburton said.
New programs
Mr Warburton said Ten was making progress on improving sagging ratings and lifting advertising revenue. However, the full benefits of the turnaround would take some time to filter through to results.
Mr Warburton also flagged more investment in buying new programs.
‘‘Implementing the strategy we have for Ten Holdings will require vision and patience,’’ Mr Warburton said.
While Ten provided no specific earnings guidance for the full fiscal year, it expected advertising markets to be less volatile in the coming months.
‘‘While visibility remains limited, we expect to see less volatility in advertising markets over the next few months and the emergence of a more consistent trend,’’ Mr Warburton said.
Ten said its television business, which generates the bulk of its earnings, suffered a 11.3 per cent decline in operating revenue.
The company offered no update on the fate of its outdoor advertising business EYE Corp, saying only that the strategic review announced in March was continuing.
As previously flagged to the market, the company will not pay a dividend for the half-year.
More soon
BusinessDay with wires