Usually the Ten Network releases its half yearly results to the market, sends them out via email and has a press conference at which chairman Nick Falloon, TV boss, Grant Blackley and head of the outdoor business, Gerry Thorley explain the figures.
Chief financial officer, John Kelly usually attends to explain any queries about the numbers.
Yesterday was release day for the 2008 figures for the year to August 31, but the company held a phone conference with chairman Nick Falloon, who has now become a sort of half speed executive chairman after a change in his employment contract earlier in the year.
So was it a 25% drop in earnings that sparked this outbreak of shyness or the 11% drop in pre-tax TV earnings? After all a 10% fall had been forecast.
The company had warned back in June that falling ad income and the impact of the Beijing Olympics on Seven, would hurt fourth quarter TV earnings and they did.
The company forecast a 10% or so drop in TV earnings, and that’s what happened. TV revenues for the year dropped 0.6% or $5 million to just over $826 million.
The company said earnings at its television business fell 11.8% to $209 million from $237 million in the 2007 year.
The market didn’t like the figures and the shares fell at the opening with the weakening market and continuing easing to finish off more than 16.5% at $1.16. The market isn’t happy.
The company is the first media group to report results post June 30, but thanks to the warning in June, we already knew that the outcome would be down.
The broadcaster wouldn’t make a forecast for the current financial year, other than to say it was "prudently positioned” to weather the difficult economy and benefit when the market rebounds.
Keeping costs at bay, its executive chairman, Nick Falloon, said the network was confident it would "withstand the current contraction in the advertising market and position the company to take full advantage of eventual improvements in the external environment".
Mr Falloon said these results "demonstrated the underlying strengths of the businesses, despite the deterioration in trading conditions in the final quarter of the year that ultimately impacted the bottom line."
"In television, TEN again delivered strong cash flow and margins. Notably, it achieved controlled cost growth (ex selling) of 4 per cent, which was well within previous guidance of 5 per cent growth for the year.
“This was achieved despite continued investment in key program franchises, including So You Think You Can Dance Australia, the Rugby World Cup and new content from our US supply deals, as well as the launch of and on-going investment in TEN HD," Mr Falloon said.
"The out-of-home (OOH) advertising business, Eye Corp (EYE), grew media revenues by 15 per cent, driven by EYE’s strong established businesses. EBITDA for EYE was impacted by difficult trading conditions, combined with start-up losses arising from investment for future growth in the US and UK markets."
"The Company’s television division, TEN, remains focused on maintaining highly competitive audience shares in key advertiser demographics across all day parts, capitalising on the network’s strong pipeline of program inventory.
"The dividends from the investment we have made in television infrastructure will be realised over coming years, providing new revenue streams and numerous cost-efficiencies for TEN.
"In OOH, EYE provides a long term value model in a growth sector. Despite the current tough trading conditions, OOH remains amongst the fastest-growing media forms in all territories where EYE operates.
“Through its multi-format campaigns directed to drivers, flyers, shoppers and students, EYE is well placed to continually expand its offering, market penetration and value.
"We are confident the sensible strategies, promising initiatives and flexible infrastructure in place will see Ten Holdings withstand the current contraction in the advertising market and position the Company to take full advantage of eventual improvements in the external environment," Mr Falloon said.
Ten had a strong start to 2008 with So You Think you Can Dance, and good figures for The Biggest Loser and several other programs, but lost its way mid year as ratings for Big Brother fell and consigned the format to the unwanted bin.
Ten’s back half performance since July has seen it lose all those first half audience gains.
Idol hasn’t been doing well, but the Network says it will return in 2009.
Normalised profit dropped 24.7% to $89.6 million in the year to August. Adding a one-off tax gain of $183.9 million, its net income climbed from $66.1 million to $273.5 million.
Ten isn’t the only TV Network to encounter earnings problems.
The high rating Seven Network has already warned that first half earnings will be down 40%-50% because of falling ad revenues, rising costs and investment losses.
