May 26, 2014

Why cutting jobs won’t save Ten

Ten can't keep going on like this - impairment tests and a big loan repayment due in a few years mean it needs a stunning turnaround to survive, writes Glenn Dyer.

The embattled Ten Network has been cutting jobs to try to staunch the bleeding as revenues slump, but it won’t be enough to save the network. With the same collection of duds and moderate performers in the schedule, Ten faces months of continuing revenue pressures. It needs hit programs to arrest the slide in audience numbers and reassure investors and advertisers that it is still in business.

But even if it does that, Ten will still face more hurdles. Once the company’s financial year ends in August, the board meetings following will have to test the value of the company’s assets and their ability to continue generating returns for the company — that is, conduct impairment tests. Ten conducted such a tests in early 2013, and the result was write-downs of more than $292 million in the value of the company’s TV licence in the 2012-13 interim result, and the subsequent after tax loss of $284 million. These tests are required annually and at other times if the board thinks the company’s assets — organised into what are called cash generation units  — are likely to underperform. If there is no impairment, Ten’s board will be under pressure to explain the reasoning, given the weakness seen so far in 2014.

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