Ten acknowledges need for better content
Delivering Ten Network Holdings’ bleak results for the half year to the end of February, executive chairman/CEO Hamish McLennan today acknowledged the bleeding obvious: the network must improve its entertainment programing.
McLennan said the strategy of focusing the flagship channel on “Event TV,” including premium sport, aimed at people aged 25 to 54 would continue. Despite strict cost controls, the broadcaster will “make prudent and strategic investments in content” to pursue its turnaround.
“We have consistently said that it will take time to improve Ten’s ratings, revenue, earnings and returns to shareholders,“ he said. “We remain committed to improving the nature of our existing agreements with various content partners.
“Our sport, evening news and current affairs programs are performing well, along with the Eleven joint venture, One and our day time program schedule. But the Ten channel’s general entertainment content and scheduling has under-performed and needs to be improved.”
McLennan conceded the ratings for general entertainment content were disappointing and spoke of "ageing program franchises" and the need to focus on fresh formats and more cost effective local production.
He named program scheduling as a priority, an issue which Ten had attempted to address by hiring John Stephens, now the centre of a court battle after Stephens opted to stay with the Seven network.
He expects an uplift in ratings with the upcoming launches of MasterChef Australia, Offspring, 24: Live Another Day and Under The Dome, plus the Commonwealth Games.
However Credit Suisse analyst Samantha Carleton sees few "game-changing" opportunities for the company to turn ratings around in the near term. She sees two options for the broadcaster. One is to increase investment in local content and event TV that may or may not pay-off from a ratings and revenue share perspective.
The alternative is to run a smaller, more profitable business on a lower revenue share by reducing costs and shifting the sales force towards a more direct model or partnering with MCN on the sales side. "The latter appears less risky," she said.
The company reported TV earnings before interest, tax, depreciation and amortisation of $10.1 million as TV revenue increased by 4.4% to $315 million in the first half.
The net loss after tax of $8 million compares with a net loss of $243.3 million in the previous corresponding period, which included non-recurring charges of $244.8 million.
McLennan said the results reflected the impact of higher programming costs, investment in premium sport content and modest growth in the TV advertising market.
The increase in revenue from the KFC T20 Big Bash League and Winter Olympic Games did not offset the investment in new content, he noted. First-half TV costs, excluding those two events, rose by 8.2%.
Looking for positives, McLennan pointed to the increasing popular catch-up service tenplay, which is getting more than 3.8 million views a week, and digital advertising revenue which improved by 21%.
Unsurprisingly, there is no interim dividend for shareholders.