Tough Aussie Ad Market Pushes Ten’s Profits Down

SYDNEY - Ten Network Holdings has posted a 70 percent drop in half year profit as revenue shrank in a difficult trading environment and the network continued to implement the results of then acting CEO Lachlan Murdoch’s 2011 strategic review, which focussed on reducing costs while rebuilding audience.  

Ten CEO James Warburton, in his first major public statement since taking the helm at the network in January as Murdoch moved to the role of chairman, reported a profit slide of $14.8 million year-on-year for the six moths’ to Feb. 29. Television revenues fell 11.3 percent year on year to $359 million and pre-tax  earnings at the third ranked commercial network, dropped 40 percent to $56.8 million. Ten also owns outdoor advertising business Eye Corp.

Those results translated into a fall in revenue share, with Ten showing a share of 25 percent of advertising booked through agencies while Nine’s share is 33 percent and top rating network Seven leads the market with 40 percent.

Warburton said the results reflected the tough conditions in ad markets here during the six-month period.

“Advertising markets were soft, particularly in late 2011 and early 2012,” he 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."

Costs dropped 2.4 percent in the period to $301.5 million.

"The benefits of us getting fit for purpose, and specifically in terms of the operational review and the cost savings, have been great in building us a platform," he said.

Nevertheless it will take time to turn around Ten's financial results, Warburton said.

"The results of that will not be felt immediately. It takes time, specifically to build a ratings trend on the main channel, and again time to then monetize that trend," he said.

That will come in an ad market which remains “short.”

“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,” Warburton said.

The focus he said was now on the “broadcast fundamental of ratings and revenue, while the TV business needed to be more “creatively dynamic.”

He was more upbeat abut Ten’s ratings and revenue prospects, announcing a raft of new programs for the second half of the year in what was more like an upfront presentation, than showing a struggling network bleeding red ink.

While remaining third overall the network's ratings position has improved in key demographics he said, growing 1.6 percent across its main channel and digital multichannels, during the period. Audiences are expected to return in bigger numbers with new post-Easter programming, including for its big ticket reality show, Masterchef.
Masterchef will anchor the schedule which will include imports Touch and The Good Wife, new lifestyle programs The Living Room and Fashion Star, local dramas Bikie Wars and Puberty Blues, and fly on the wall shows Being Lara Bingle and The Shire.

New programs coming after the Olympics – which will be seen on the rival  Nine Network and paynet Foxtel - include four new locally developed entertainment formats: musical theatre talent competition,  I Will Survive: Priscilla and dance show, both from Fremantle Media Australia; cooking and dating format Come Date with Me from Granada Media and a wedding day with a twist show,  Don’t Tell the Bride from Endemol Southern Star.

Ten’s chief programming officer, David Mott, said the new shows are ”bold, irreverent, fresh, innovative and noisy.”

“Never before have we had so many new and dynamic shows to offer Australian audiences. It’s an exciting time for us and we look forward to seeing these shows come to life throughout the year,” Mott said.