Ten Network Holdings Ltd. (TEN), the Australian television company which counts Lachlan Murdoch as chairman, posted a record first-half loss as it wrote down its broadcast license amid a ratings slump.
The net loss was A$243 million ($253 million) in the six months ended Feb. 28, compared with profit of A$14.8 million a year earlier, the Sydney-based company said in a regulatory statement today. Sales fell 22 percent to A$337 million.
Ten will work to reduce costs amid disappointing ratings this year, Chief Executive Officer Hamish McLennan said in the statement. The company’s performance has been “unsatisfactory,” said McLennan, who is also an executive vice president at News Corp., run by Lachlan’s father Rupert Murdoch.
“The issues facing Ten have no quick fix,” Jarrod McDonald, an analyst at JPMorgan Chase & Co. in Sydney, wrote in a note to clients on March 26. “We see any potential turnaround requiring time and re-investment.”
Ten climbed 6.8 percent to close at 31.5 Australian cents in Sydney, the biggest increase since March 1. Today’s gain trimmed its decline over the past year to 48 percent, compared with a 15 percent advance for Australia’s benchmark S&P/ASX 200 Index.
The company twice sold stock over the past year to pay debt and turned off advertisers with programming flops, including a talent show hosted by Lachlan Murdoch’s wife Sarah that was canceled within weeks of its first broadcast in August.
Southern Cross Media Ltd., which pays Ten to rebroadcast its programs in regional areas, may switch to Nine Entertainment Co., cutting millions of dollars worth of revenue, according to CIMB Group Holdings Bhd. (CIMB)
Excluding one-time items, Ten had net income of A$6.8 million, compared with the A$18 million loss foreseen by analysts, based on the average of three estimates compiled by Bloomberg.
Southern Cross pays about 30 percent of annual revenue to Ten in return for rights to its content, CIMB’s Fraser McLeish wrote in a note to clients March 4. That would have been equivalent to about A$205 million in the 12 months through June 2012, according to data compiled by Bloomberg.
“Ten’s ratings weakness provides a strong incentive for Southern Cross to switch content providers,” McLeish wrote.
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