Australia’s broadcast TV media (free to air and pay) is looking increasingly isolated as the December 31 reporting period comes to an end. The slide in revenue, earnings and asset values is destroying balance sheets and raising questions about the future of companies such as Seven West Media, Nine Entertainment and the Ten Network as stand alone businesses. 

Nine Entertainment Co this morning joined the list of the financial impairing, which now includes the likes of News Corp and Seven Group Holdings (Kerry Stokes’ key company) in writing down the value of key assets (in this case, the fiction that is “goodwill” associated with its TV licences). This, in turn, raises the pressure on rival Seven West Media to follow suit later this year. Ten Network has warned that it will now look at its asset values and possible impairment after reporting last week that instead of a small profit, it now expected to make a loss for the February half year and possibly for the year to August 31.

Seven West has already been forced by the corporate regulator, ASIC, to write down the value of its Yahoo7 joint venture by $75 million for the December half year and its 41% shareholder, Kerry Stokes’ Seven Group Holdings cut the value of its stake in Seven West by $157 million in its December interim accounts. News Corp chopped the value of its 50% stake in Foxtel by US$227 million (around A$300 million) and Foxtel has cut the value of its 13.8% stake in Ten by around $10 million or so.

The tide of impairment-driven red ink continued with Nine Entertainment reporting a statutory loss of $236.9 million for the half, down from $320 million a year earlier. That was after a total of $311 million in one-off items, including impairment of goodwill of $260 million. Revenue fell 4.5% to $659.2 million in the half year and earnings before interest, tax, depreciation and amortisation (the key baseline measure for comparison in the media) fell 6.4% to $119.7 million.

In fact amid the gloom some light from a higher profit for Southern Cross Media Austereo, thanks mostly to the change in network affiliation from the weak Ten to Nine. That boosted Southern Cross’ regional TV revenue (up 24.7%) and performance. Net profit after tax rose 11.8% to $48.5 million, with revenue up 9.2%. — Glenn Dyer

Peter Fray

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