Shares in the Ten network are trading around $1 ahead of the release of the TV network’s first-half financial results for 2015-16 tomorrow. That $1 price is equal to 10 cents before the 10-for-one share consolidation last year. On that basis Foxtel is down a third on its investment in Ten (it paid 15 cents a share). The network is expected to report improved revenue and operating earnings.

A year ago the company reported a $251 million impairment of the value of its TV licence, which helped send the company deep into the red — a loss of $264.4 million was reported. The company reported earnings before interest, tax, depreciation and amortisation (EBITDA) from its TV business of $7.5 million, down from the$10.1 million reported for the February 28, 2014, half-year. TV revenue was $309 million, down from the$315 million in the first half of 2013-14. These two figures (TV EBITDA and revenue) are the two figures to watch in tomorrow’s report. Ten has to top them convincingly, as well as provide a fairly upbeat outlook statement for the rest of the year, to reassure investors it will still be around at the end of this year.

As well, the debt figure of $92.3 million a year ago is another indicator. Ten has a $200 million revolving credit with the Commonwealth Bank on which its interest costs are being capitalised (built into the repayable figure). That debt is a potential millstone for Ten and will need sorting out in the next year. Ten doesn’t have the resources at the moment to repay it and with the proposed media law changes dead in the water, it could be a year or more before they can be revisited. The reach rule and the media ownership rules need to be relaxed considerably to allow News/Foxtel to buy control of Ten, repay the CBA debt and to consolidate it.

No rule changes and the question of just how the debt can be repaid becomes the next obstacle for Ten and its Murdoch clan masters to confront. Keep in mind that the Nine network’s revenue and profit warning, based on a weak March quarter, might not apply to Ten with the same force. Compared with Nine’s weak start to the year, Ten had a solid summer with the Big Bash cricket, a solid start to ratings with I’m A Celebrity, and good revenue growth. But its ratings have sagged in April, and that could impact the current half year (which will be Ten’s weakest).

Peter Fray

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