Free TV Woes: Nine Post $203.4m Loss, Murdoch’s Takeover Bid For Ten Clears
Blaming a 3.5% shrink in the total TV ad revenue market, coupled with notable asset write-downs inclusive of its free-to-air TV network, Channel Nine has announced a $203.4 million full year loss.
Total revenue dipped 3% to $1.24 billion with TV-specific revenue falling 4.4% in the year. Group earnings-before-tax (EBITDA) increased by 2% (to $206 million), inclusive of a $33 million benefit from the regulated removal of licence fees.
A group-wide reduction in costs (5%) helped lift Nine’s underlying profit to $123.6 million, which is a 2.7% increase from the previous year.
As at 30th June, net debt was $225 million. The increase of $46.9 million from last year was a result of Nine’s strategy to create local content to replace underperforming US material, in addition to its payment of licence fees and a short term debtors build.
A total of $327.1 million in impairments was recorded – up from $311.9 million in the first half – with the non-cash impairment of its TV network remaining at $260 million.
Nine acknowledged that rival Seven had taken a hit on its revenue, especially through its coverage of the Rio Olympics.
Other notable expenses included an $86 million provision to leave the ‘Life of Series’ obligation with Warner Brothers comprised of a suite of US comedies and dramas.
Interestingly, Nine boasted a 37.1% commercial network share [of the 25-54 demographic] and a number one share in all key buying demographics.
Nine remains positive on its future outlook, expecting TV revenue to rise 15% in the September quarter and digital revenue to lift 8%.
Chief Executive Hugh Marks affirms, “With a strengthening balance sheet, and significant operational momentum and leverage, Nine enters the new financial year in a much stronger position”.
Across the road, today the ACCC has given their clearance for Lachlan Murdoch and Bruce Gordon’s takeover bid for Channel 10.
Gordon [owner of Birketu] and Murdoch [owner of Illyria] each propose to acquire a 50% interest in Ten and operate as a joint entity.
The ACCC has now green-lit the proposed joint bid, stating it is unlikely to cause “substantial lessening” of competition in any related market.
“Even though incentives to compete may be weakened if the proposed acquisition proceeds, Ten and Foxtel/News Corporation will remain competitors in a number of markets and will be subject to our competition laws which prevent them from making anti-competitive agreements”.
Channel Ten is currently in voluntary administration with KordaMentha. PPB Advisory has been appointed as receivers by the Commonwealth Bank in June after a $200 million debt fell due in December.