The market took the news of a better first quarter from the Ten Network in its stride.
The shares dipped 3c in yesterday's post Fed cut downturn that saw our market go lower, but by the close they ended up one cent at $2.88.
Ten told the AGM in Sydney that it was doing better and had now strung together four consecutive quarters of improving performance in its core TV business.
After the last three quarters of 2007 boosted earnings above the depressed 21006 level, ten had forecast 'double digit' growth in TV revenue and group earnings.
And that's what it revealed yesterday with overall first quarter earnings up 14.2% on the same period last year.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $122.5 million and its overall EBITDA margin was 38% for the three months ended September 30.
The company said television revenue was up 11% to $278.6 million, doing a bit better than forecast, while costs were up just 5% and that will improve to below 5% over the next nine months.
The outlook for TV is solid according to Ten, with the group expecting its share of advertising in the six months to December to exceed 2006"s 30.3%.
With Seven expected to reach a 40% share, Nine has lost more ground in the second half, and it failed to get its share of political advertising as its audiences in the 18 to 49 group fell.
Ten said group revenue rose 11.3% to $327 million and an interim dividend of 10c a share (9c in 2006) is being paid out, which represents 100% of earnings.
But the meeting featured something unusual.
Perhaps the one of the best shareholder questions I've heard at any annual meeting.
A small shareholder in Ten Network got to her feet and proceeded to silence the room at Star City Casino in Sydney.
The 100 or so shareholders and as many brokers, analysts, media and Ten executives listened as the elderly woman took the company to task for its poor performance over the past three years.
It was as elegant dissection of a lack of performance as anything I've heard.
And Mr Falloon found it hard to reply.
She asked why the company's share price had fallen from $4.15 in 2004 to $2.87 Tuesday night (and of course $2.84) and why dividends per share had fallen to 14c from 21c in the same time.
She contrasted that with the almost doubling in the Seven Network share price and the rise in dividend from 22c a share to 39c. She then asked why Ten's shares had had a negative return of 7.6% in the three years and Seven a positive return of 31.8%.
It was a question executive chairman, Nick Falloon found difficult to answer.
He did point out there had been speculation, time to time about the company as a takeover target and also pointed out that it had paid out 100% of earnings each year.
That means when earnings fall, as they did in 2006 in particular, dividend payout falls.
And, with the Canadian company, Canwest, now owning 56.7% of Ten, another part of the answer was the fact that the private equity deal Canwest had been looking for had fallen over earlier this year. That dragged the price down under $3, which was still a long way from $4.15.
Another part of the answer was that for years Ten has had a difficult corporate structure because of the Federal laws against foreign ownership.
Canwest bailed Ten out of its bankruptcy blues just over a decade ago and couldn't own the shares past 14.9%, so it had to hold debentures, which required payment of interest.
That and the need to keep paying dividends, drained Ten of its reserves and meant its dividend was exposed to any drop in earnings, which happened in 2006 when it was badly hurt financially by the impact of the Commonwealth Games, and sluggish ratings the year before.
Not even the move up the register again by Bruce Gordon and his WIN group has injected any spark into the Ten share price. With Canwest sitting on a controlling stake, Mr. Gordon is buying in hope rather than anything else.
He was at the meeting, but silent.
Mr Falloon did tell the meeting that while the board had nothing to say on capital management ideas at the moment, it would look at them in 2008.
The tenor of the question from the small shareholder, and the applause it gathered from other holders in the room at Star City, should send a message to Mr Falloon and Ten that 2008 might be when the time is right to do something by way of capital management.
The question was well thought out and needs answering by the company with something concrete, not words.
