NETWORK TEN: Books AUD227MM Loss, Warns of Pandemic Impact

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Zoe Samios at The Sydney Morning Herald reports that Network Ten has warned that the coronavirus pandemic could have a material impact on its financial position after posting a AUD227 million loss and writing down the value of its television licences and programming contracts.

According to the report, the ViacomCBS-owned network, which runs television shows such as MasterChef, The Masked Singer and The Bachelor, made AUD602 million in the year to December 31, 2019 but slumped to a AUD266.6 million loss as it moved its sales team inhouse and invested in expensive shows and sports deals.

Documents filed with the Australian Securities and Investment Commission on July 3 include a AUD10.7 million write down in value of programming rights and a AUD46.6 million write down of onerous contracts, SMH relays. Excluding significant items, Ten posted earnings before interest, tax, depreciation and amortisation of AUD24.2 million.

SMH relates that a Ten spokesman said that the large costs were due to increased local investment. The network, which was bought by CBS–now ViacomCBS–in 2017, brought its sales team inhouse after ending its Multi-Channel Network joint venture with Foxtel after four years. The company also invested in expensive shows such as The Masked Singer and The Amazing Race and commenced its first year of a new AUD100 million broadcast deal with the Victorian Racing Club.

“It was a year of investment at Ten as we bedded down our prime time schedule and set up our sales team for success,” a spokeswoman said. “The results of that investment are evident this year: audience and audience share growth, and TV ad market share growth.”

Ten has reported consecutive months of audience share growth since last August and revenue share growth since last October. But outgoing chief executive Paul Anderson said the company had experienced revenue decline of up to 38 per cent in 2020 because of drastic falls in advertising spend caused by the pandemic.

The broadcaster booked AUD113.28 million worth of advertising between January and March this year, according to Think TV figures previously obtained by The Age and The Sydney Morning Herald. But the biggest impact of advertising slump was felt by media companies in April and May. Production of some of Ten’s shows, including Australian Survivor, were also affected by the pandemic. Ten also had the rights to broadcast the Formula One in Melbourne earlier this year but the event was cancelled due to government restrictions.

“The impact of COVID-19 on the company’s businesses — including postponement, cancellation or rescheduling of televised events for which the company has broadcast rights, and production delays in television and entertainment programming – could be material to the company’s operating results, cash flows and financial position,” the report quotes Mr. Anderson as saying.

“Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the adverse impact on the company’s operating results, cash flows, and financial position — including advertising, affiliate and content licensing revenues — particularly over the near-to-medium term.”

The report comes as ViacomCBS merges Ten with other local entities, SMH notes. The company promoted Ten’s chief content officer Beverley McGarvey earlier this year as head of content across all brands, including MTV and Nickelodeon, while chief sales officer Rod Prosser took control of ViacomCBS’ sales division. ViacomCBS is also currently looking for a chief transformation officer for Ten.

ViacomCBS and Ten are in the final phase of merging the two businesses, the report notes. Ten does not have directly comparable accounts from 2018 because of a change in its reporting year.

Network Ten is one of Australia’s leading entertainment and news content companies, with free-to-air television and digital media assets.

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