The Ten Network believes it’s focused and targeted approach to running a TV business will stand it in good stead in any economic slowdown or downturn in advertising.
Network executive chairman, Nick Falloon said in Sydney yesterday that Ten’s targeted approach had put it in the best position it had been in for years.
He said ratings, revenue and earnings were up and 2009 was looking to be a strong year, even if there was a slowdown.
He said the company was in the midst of renegotiating its debt lines for the next three years and the credit crunch would cost it an extra $2 million a year.
But Mr Falloon said Ten was lowly geared and well positioned to take any opportunity to grow the business, should that arise.
He said the board was still considering capital management ideas, but it was no longer as big an issue as it was six months ago at the end of the 2007 financial year.
Ten yesterday reported an 11% rise in normalised interim earnings for the six months to February 29, 2008.
The Company said the star was its TV business, Network Ten (TEN) which posted an industry-best 36.6% operating margin for the half. EBITDA jumped 11.4% as the network continued to translate ratings momentum into higher earnings and market share.
Group revenue rose 8.9% to $526.5 million, while group EBITDA increased 11% to $163.7 million. Television revenue grew 7.7% to $433.8 million.
And on a normalised basis, net profit in the period to February 29, 2008, rose 16.9% to $86.86 million
Ten said its share of metropolitan TV revenue in the six months to December 2007 exceeded that of the prior comparable period, reaching 30.8% and its TV costs (ex-selling) was contained to 5% and is tracking in line with guidance of within 5% for the full financial year.
Ten said "total normalised operating revenue at the Company’s out-of-home (OOH) advertising division, Eye Corp (EYE), rose 15 per cent. Normalised earnings were comparable year-on-year despite previously flagged start-up losses in international developing businesses."
Mr Falloon said "Our strategy to expand TEN’s pipeline of international content – through agreements with 20th Century Fox Television and CBS Paramount International Television – and enhance our domestic slate is positively affecting ratings and earnings.
"TEN is enjoying its strongest start to a ratings year in key buying demographics since OzTAM began in 2001. For the six weeks of 2008 survey to date, we’re number one in our target 18-49 demographic, enjoying significant audience growth on 2007 in all major audience groups* and gaining revenue market share.
"We’ve achieved all this while also returning TEN’s operating margin to its customary industry-leader status, now nearly 37 per cent."
Of the Company’s Out of Home division (the old Eyecorp, now EYE) , Mr Falloon said: "EYE’s start-up businesses in the US and UK are tracking well as we invest for the long term. We remain confident in the business model and the potential for EYE’s international operations to mirror their established Australasian counterparts."
He said the TV advertising market was remarkably resilient, notwithstanding the current crunch in debt and equity markets. "To this point, we are already ahead of last year in the March/April period and tracking well in other months," Mr Falloon said.
"As management predicted, TEN is gaining market share, and we expect to further improve on our record start in key buying demographics.
"Television costs are firmly under control, and based on current projections TEN is set to better 2007 EBITDA in the current financial year. However, that projection will depend on the influence of the Beijing Olympic Games and the state of the advertising market during that period.
"EYE’s established businesses remain highly profitable as we continue to invest for growth. Start-up losses are now expected to amount to approximately $12 million (previously forecast as $10 million) for the financial year as a whole, with the $2 million increase reflecting the less robust market conditions in the United States and the United Kingdom."
Shareholders received their first fully franked ordinary dividend payment for 2008 of 10.0c per share (cps) on 4 January, up on the 9.0 cps paid in the prior corresponding period and maintaining the Company’s position among the sector’s higher-yielding stocks. It is the current intention of Ten Holdings to announce its second fully franked ordinary dividend for 2008 in June with payment in early July.
Grant Blackley, chief executive officer – television, said: "TEN is confidently moving through 2008, empowered by our strongest start since OzTAM ratings began in all key buying demographics.
"In the six weeks of 2008 survey to date, we’re number one in 18-49 and building on our record share in that demographic achieved in 2007.
"TEN’s audience in our target 18-49 demographic is up 9.1 per cent on the same time a year ago.
"For the second year in a row, TEN is number one in all major demographics in daytime and we’re extending that lead.
"The US writers’ strike is concluded, removing a considerable area of uncertainty, and our agreements with CBS Paramount International Television and 20th Century Fox Television are fully on-line, delivering TEN significant volume in new series to date including Back to You, Rules of Engagement, Burn Notice and Women’s Murder Club.
"Adding to our AFL and motorsport portfolio, we have progressively expanded our premium live sport inventory, securing exclusive Australian broadcast rights to the Indian Premier League Cricket for the next five years as well as free to air rights to the 2010 Delhi Commonwealth Games.
"As with our profitable 2007 Rugby World Cup covera
