Television broadcaster Ten Network Holdings Limited (ASX: TEN) has announced significant cuts to its programming and staff in an attempt to rein in costs and save the struggling free-to-air station.
While the $700 million media company is yet to make an announcement to the stock market, Fairfax Media press were today reporting the details of internal company emails and briefings which have occurred.
Like its rivals Seven West Media Ltd (ASX: SWM) and Nine Entertainment Co Holdings Ltd (ASX: NEC), Ten Network has been affected by the headwinds of structural change as consumers (and therefore advertisers) have shifted their attention (and money) to digital media platforms.
Unfortunately for Ten Network it has also suffered a sharp fall in ratings compared with rivals, this has added to the firm's difficulties. These problems have been reflected in its results – the most recent interim results showed a loss of $8 million – and in its share price which has fallen 5% in the past year, compared with a gain of nearly 5% from the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).
With costs up more than revenues and an underlying loss recorded, Ten Network needs to turn things around and fast! With Fairfax reporting that 150 staff will be let go and all news programming except the 5pm service cut, it appears the cost base is undergoing a significant restructuring.
Unlike some companies where a turnaround is nearly always slow and arduous, a television station can potentially turn around its fortunes quickly. A few hit shows are sometimes all it takes to draw the viewers' eyeballs back.
Couple the possibility of a ratings turnaround with speculation that potential overseas-based acquirers have been sniffing around and there are reasons to suggest the future could be brighter for Ten's shareholders.
