Ten Network’s share price rose again yesterday as punters chased possible gains from the buying of James Packer in the country’s third-ranked TV network.
The shares finished up 2.5c at $1.57, for a gain since Monday of around 14.5c or 10%, thanks to the Packer buying.
Two days after Packer started his raid on its share register, the Ten Network confirmed that revenue and earnings had recovered in the year to August.
The Sydney-based network revealed an annual after-tax profit of $150 million.
Ten said it had seen a sharp improvement in revenues, especially from TV, which led to higher earnings.
And, more importantly for suffering small shareholders, it revealed the resumption of dividends.
That will involve the payment a 6c a share unfranked final and a special 5c a share payment after a surprise tax refund.
Ten said group revenue rose 10% to $991.5 million from 2009’s $902.5 million; group earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 38% to $208.1 million (2009: $151.0 million); TV EBITDA was up 37% to $194.2 million (2009: $142.1 million). Reported group net profit after tax was $150.0 million, and underlying group net profit after tax was up 105% to $96.9 million (2009: $47.2 million).
The company said it now expects to pay around 65% of profits out as dividends, compared to the previous policy of 100% that was abandoned when the GFC hit.
The timing of the tax refund will mean that only one dividend will be paid in 2011 and that will be a final to be paid in December of next year.
The company will then revert to interim and final payments.
The result was in line with the market update in August, with earnings before interest, tax, depreciation and amortisation up 37% to $194 million.
The network has also revealed only modest revenue increases for the period of the Commonwealth Games, which recorded poor ratings.
It said revenues for those two months were up 6% on the same period last year (excluding the AFL grand final), despite the $25 million cost in broadcasting the games.
It also expected total costs to rise by 11% this financial year, as it spent more on securing rights for its main channel, Ten, and its multi-channels, the sport-focused One and younger-oriented Eleven which is expected to be launched in January, and the on the two new news programs.
The company said the cost of the national show fronted by George Negus at 6 pm and local bulletins at 6.30 pm – would cost $15 million this financial year and an annual cost of $20 million after that.
Ten said television revenue rose by 12% while group revenue lifted by 10%.
"These results for 2010 demonstrate that Ten Network Holdings is reaping the benefits of steps taken to streamline the business, strengthen our content offering and maximise the effects of the rebound in the television advertising market," executive chairman Nick Falloon said.
"Television revenue grew by 12 per cent on the previous year, with the level of growth demonstrably stronger in the second half at 20 per cent on the (corresponding) period in 2009."
Chief executive Grant Blackley said in the statement that Ten had achieved strong advertising revenue growth between January and June this year, up more than 21% on the corresponding period last year.
"Following a major rebuild of the schedule over the past couple of years, Ten has an appealing, well balanced and consistent program schedule that achieved a strong performance in our key demographics.
"At the close of the financial year, Ten was number one in 16-39s with 37.4% share, number one in 18-49s with 34.7% and number two in 25-54s with 33.4% (up 3.3% on 2009)."
Mr Blackley said Ten’s first digital multi-channel, ONE, was Australia’s leading sports channel, reaching 12.1 million viewers to date and 3.6 million every week.
"ONE continues to make a profitable contribution to the network," he said.
Mr Falloon said Ten expected aggregate television cost growth of 11%t in the current financial year.
"As previously advised, the early evening news strategy will result in an annual incremental cost of $20 million ($15 million for FY2011)," he said.
"The FY2011 cost base will also reflect the one-off impact of the $25 million investment in the Delhi Commonwealth Games.
"We also will be investing incrementally in the operation of ELEVEN from launch in January 2011.
"Costs for FY2011 will also reflect the absence of the AFL Grand Final in that financial year, with the AFL Grand Final returning to TEN in FY2012."
Mr Falloon said Ten would continue to benefit in the 12 months to August 31 next year from the television licence fee rebate, which it was reinvesting in the Australian broadcast sector.
The outdoor division, Eye, recorded no revenue growth, but its EBITDA increased by almost half to $15 million. It will be sold off.
