Prime Media Warns Of ‘Depressed’ Ad Revenue
Prime Media has warned that regional advertising revenue will continue to be depressed throughout the 2020 financial year.
It comes after the media giant reported a 56 per cent slump in first-half net profit that resulted from rising operating costs and strong competition from tech giants, Google and Facebook.
The embattled regional broadcast recently survived a failed $64 million takeover by Seven West Media just before Christmas and now has three media bosses as its top shareholders. It said regional markets continue to operate in challenging conditions with overall declines expected to continue until June.
Ian Audsley, chief executive of Prime Media, described the past six months across the nation’s regional areas as ‘difficult,’ according to The Australian.
‘Trading conditions have not improved in the current quarter and forecasting is difficult given the short trading conditions,’ Audsley said in an announcement following the ASX close of trade on Tuesday.
Prime’s net profit dropped to $4.5 million for the six months to 31 December down from $10.2 million. Revenue also took a hit, down 7.2 per cent to $90.8 million.
The group’s operation costs rose by 3.1 per cent, including $1.5 million in transaction costs associated with the proposed scheme of arrangement with Seven, alongside a fall in costs of $805,000 after introducing new accounting rules.
First-half core profit after tax fell 46 per cent to $5.5 million, which is expected to hike to between $8 million to $10 million by the end of the financial year to June.
But Audsley said the Tokyo Olympics would bring in major advertising packages and would be a key focus for Prime. It’s due to be broadcast in July and August.
‘The Olympic broadcast has attracted significant interest from national advertising sponsors, with major advertising packages being negotiated.
‘Local advertising markets continue to be influenced by local conditions and competition for local advertisers from platforms such as Facebook and Google,’ he said according to the publication.
Seven, controlled by billionaire businessman Kerry Stokes, bought a cornerstone 14.9 per cent stake in Prime on 19 December just hours after its proposed takeover failed after two major shareholders, Antony Catalano and Bruce Gordon, voted against it.
The deal made Seven Prime’s biggest shareholder, giving it a seat in future industry consolidations.
Prime shares closed 3.3 per cent lower at 14 cents on Tuesday.