The Ten Network’s abortive attempt to raise $90 million dollars last week also produced an earnings and revenue downgrade and asset value reductions for the country’s third Free To Air TV network.
It also put the share prices of other media groups under even more pressure.
Prime TV, the Seven Network’s regional TV affiliate followed with lower earnings and write-offs.
It’s a grand tradition that other media companies this week will do their best to follow: Fairfax did it in grand style yesterday, the Seven Network tomorrow, Macquarie Media Group a later in the week, along with APN News and Media and Consolidated Media Holdings, James Packer’s media vehicle.
The Fairfax result yesterday was predictable: no issue, debt to fall, earnings and revenues under pressure for at least the next 18 months or more.
Gloom all around and the possibility of more job cuts has to be on the agenda.
Fairfax said interim underlying net profit was $157.61 million, down 23% from $204.61 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) was $370 million, down 11.6%.
Every business, bar the on line operations, reported lower contributions (Radio is not included in that assessment as the contribution the previous year was not meaningful).
Revenues fell in Australia and NZ newspapers and other print publications, but rose strongly in the digital businesses.
Fairfax said restructuring and redundancy charges amounted to $62.4 million (that’s the 550 job cuts announced last August in Australia and New Zealand).
It also had an impairment charge of $1.4 million for plant, equipment and software and another of $30.1 million related to goodwill on the sale of the Southern Star television production and distribution businesses (That was already signalled when it completed the sale of the unwanted bits of Southern Star last month).
And it had a non-cash impairment charge of $447.5 million against the value of mastheads, licenses and goodwill across all publishing and broadcast media properties.
The reduced dividend of 2 cents a share is being paid (Unlike the New York Times which late last week abandoned its reduced payout completely for the foreseeable future).
And the company warned that "Trading conditions in January were weaker and this has continued into February.
"While we anticipate some improvement in display advertising in March, classified advertising is generally expected to remain weak for at least the remainder of this financial year in both Australia and New Zealand. Our online businesses continue to generate growth, with trading in those sectors relatively steady.
"Further cost benefits from efficiency initiatives will flow through in the second half, and will provide some buffer to the weak market conditions."
The presentation revealed that at June 30 2008 Fairfax was confident about not needing a cash issue. It said it was still well clear of its loan covenants regarding debt and interest payments.
It said its cash position would improve this half, allowing more debt to be retired.
The Southern Star sales proceeds will be received, lower interest rates and the money saved from the dividend cut will finance a cut in its debt that was $2.544 billion at December 31, 2008.
ABN Amro media analyst Fraser McLeish said he saw no imminent threat to the company’s covenants, even with $2.3 billion in debt exceeding the company’s market capitalisation, which is around $1.5 billion at current prices.
Chairman, Ronald Walker, said: "We are delivering the very best possible results in an exceptionally difficult economy.
“The board remains fully focused on operational performance, prudent management of the balance sheet, and support for management in challenging times."
The shares fell 3.5 cents to $1.015.
