The slowly gathering story in the market that the Ten Network (TEN) was over its bad patch was badly damaged yesterday by Ten itself with what is in effect another downgrade.
Ten issued what it called "Revenue and Cost Guidance" for the market, which didn’t like the message, sending Ten shares down 6.9% (2c) to 27c in the first few minutes of trading. The shares are only 3c above the 52 week low of 24c. They were down nearly 9% at one stage.
Ten said that while its ratings have improved since the launch of Masterchef Australia and Offspring in mid-April, the TV market remains volatile (that was the good news).
As a result, it expects its TV revenue will be 3.5%-4.5% lower in the 2013-14 financial year. It also confirmed previous guidance of about an 8% rise in its TV costs. Seeing Ten had revenue in 2012-13 of $630.1 million, the new guidance means the company’s TV revenue in the year to August 31 will be down by around $20 to $27 million (that’s the bad).
But the cost of one-off events including the Sochi Winter Olympics and the upcoming Glasgow Commonwealth Games will add another $55 million to Ten’s costs. These costs will not be recovered by the ad revenues written against them.
Ten says savings from its recent cost-cutting campaign will not benefit its earnings until the 2014-15 financial year, which starts on September 1.
TEN 1Y – Ratings improve, revenue still slides at Ten
"Ten remains firmly focused on improving ratings by managing costs to ensure that maximum funds are available for reinvestment in prime time content," the broadcaster said on Thursday.
Ten made an $8 million loss in the first half of the 2013-14 financial year, which was a better result than the $243 million loss it announced 12 months earlier, due chiefly to one-off costs such as impairment charges.
But excluding those one-off charges, Ten’s first half performance this year was actually worse than seen a year earlier – it fell by more than two thirds on a 7.8% fall in revenue.
On an earnings before interest, tax, depreciation and amortisation basis (which is widely used in the media for profit comparisons and analysis), Ten reported a profit of $10.05 million compared with $34.92 million earned in the first half of the 2012-13 financial year.
