TEN Network Holdings has reported a sharp plunge in first half net profit that came in below market expectations amid tough advertising markets.
The network said today net profit for the six months to February 29, 2012, fell 70.1 per cent to $14.8 million, compared with the prior corresponding period. The result was well below market consensus of $22.6 million.
Revenue fell 10.9 per cent to $432.7 million.
“Advertising markets were soft, particularly in late 2011 and early 2012,” Ten Holdings’ Chief Executive Officer, James Warburton said.
“The difficult state of advertising markets is reflected in our results for the six months to February 29. These results, however, reflect the benefits of the Operational and Strategic Review that took place last year, in particular around cost disciplines, and the ongoing efforts to create a strong platform for Ten Holdings.
“The turnaround of Ten Holdings is continuing. Our focus is on the broadcasting fundamentals of ratings and revenue. We are making good progress on both fronts, but the full benefits of the turnaround will take some time to filter through to results.”
TEN says Television costs for FY 2012 are expected to be approximately 5% or $30 million below the prior year, including a $14 million reduction in program costs due to onerous sports contract provisions incurred as at August 31, 2011.
The poor results follow major cost-cuts under interim CEO Lachlan Murdoch, prior to Warburton’s commencement at TEN.
“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,” Warburton said.
“This year we are seeing good audience growth with our 5pm to 8pm strategy and with our Super Sunday program line-up, which has had an immediate impact.”
“The foundations of our prime-time schedule have been re-set. Now we will build on those foundations, slot by slot, program by program.
“We have built a new executive leadership team in a short space of time. That team is now completely focused on improving the performance of Ten Holdings.”
He also flagged more investment in production, including in-house productions.
“Implementing the strategy we have for Ten Holdings will require vision and patience,” he said. “A key element of that strategy is increasing our share of television revenue by focusing on selling excellence and building the CONNECT coalition, our cross-media marketing platform.
“Other key elements include producing more top-rating local television shows that we own, and reinforcing TEN’s unique brand principles.”
But 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.