Not the best of mornings for Lachlan Murdoch. His Ten Network produced what could only be described as a miserable interim result, with a writedown of the value of the company’s TV licences. And in the second radio ratings survey of the year, Murdoch’s DMG Australia stations had a mixed result (as did Southern Cross Austereo and the ABC).
The Ten result dominates because it is so bad — a loss of close to $300 million ($243 million after tax), with a writedown of $290 million in the value of the TV licence (and writedowns totalling $304 million all up), on top of the expected slump in TV earnings and revenue as the group paid the price for dud programming in late 2012.
Ten’s TV ad revenues plunged 16% to $301.7 million for the six months to the end of February from $358.3 million for the first six months to 2011-12. The group reported earnings before interest, tax, depreciation and amortisation of just $34.9 million, down sharply from the $56.8 million reported for the same period of last year and $95 million for the six months to February 2011. The company reported an underlying profit (ignoring the impact of the writedowns) of a derisory $6.8 million, less than half the weak $14.8 million reported for the same period of 2011-12.
The earnings figure includes the two-month contribution from the Eye outdoor advertising operation, which was sold late last year after Ten was forced to cut its price hopes. That means the actual earnings figure is a bit higher than it should be.
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The result makes it easier to understand why the board fired James Warburton as CEO in February. He was recruited personally by Murdoch, so some of the blame for this poor result and the writedown has to stay with him. But the chairman and board need to step up and take more responsibility than they have so far done.
The next six months of the year are the toughest in TV, with ad spending lower than the Christmas-influenced first half. Nine and Seven have sucked up a lot of money for their NRL and AFL contracts, the ad market is down around 4% from last year, and Ten’s ratings are still weak (it was again beaten by the ABC last night for third spot nationally, after claiming that position on Sunday night). Ten’s share of TV advertising has dipped to around 20-22% in recent months and looks like continuing around those levels. The impact of the cost cutting and staff retrenchments last year was seen in a 10.6% cut in TV production costs to $247 million.
The new bloke at Ten, former News Ltd executive Hamish McLennan, now has it all before him. The typical trick of blaming the departed CEO has been made with the writedowns. Now it’s up to him and his chairman to pull the network’s fortunes out of the slump that started with Murdoch’s move into the share register and the chairmanship of the network.
In radio, Murdoch’s DMG Australia’s Nova stations rose 0.3 in Sydney and Adelaide, but fell 0.5 in Melbourne, while the Brisbane station was steady. Meanwhile, 5AA in Adelaide lost 0.7. The Smooth stations in Sydney and Melbourne had contrasting results: down 0.6 in Sydney and up 0.6 in Melbourne. Overall, the radio results would have been more pleasing than those at Ten.
In Sydney 2GB regained some of its first survey losses, rising 1.4 to 14.3%, with Alan Jones adding 0.3 in breakfast to 15.7% and the noisy Ray Hadley reversing most of his first survey losses, rising 2.1 to 17. Meanwhile 2DAY FM, the flagship in Sydney of Southern Cross Austereo, had a poor survey, with its share dipping 0.9 to 8.4, with Kyle Sandilands and Jackie O shedding 0.8 to 10.2. (But the MMM network of Austereo made gains around the country.)
ABC Local Radio lost ground across the country, with Sydney’s 702 leading the way with big losses across the day. The overall share was off 1.5 to 9.7 and Adam Spencer in Breakfast lost 2 at 11.8, Linda Mottram was down 1.5 and Richard Glover in Drive was off 1.6. Fairfax Radio’s 2UE in Sydney added 0.2 to 4.3 and 4BC in Brisbane added 0.6 to 6.8.
But 3AW in Melbourne, the main station for Fairfax Radio, lost 1.1 to 12.8 (but is still market leader). However, Neil Mitchell lost his crown as king on Melbourne’s morning talk backers to John Faine of ABC 774. Mitchell shed a massive 2.3 to end the survey with a 12.9 share. Faine lost 0.4% to 13.2 and leadership in mornings by default. 774 lost 0.8 to 11.7 and second behind 3AW. In Sydney 702 is still second behind 2GB.