Embattled free-to-air broadcaster Ten Network Holdings Limited (ASX: TEN) has booked a $264.4 million net loss in the first six months of the 2015 financial year, on the back of lower television revenue and a television licence impairment of $251.2 million.
The Highlight
One of the most interesting things to come from Ten's report today was a comment made by the network's CEO Hamish McLennan.
Ten has received plenty of media attention recently in relation to a potential deal with Foxtel, which is owned by Telstra Corporation Ltd (ASX: TLS) and News Corp (ASX: NWS), whereby Foxtel could inject a large amount of cash into the struggling business. As reported by the Fairfax press, Foxtel could be prepared to inject up to $85 million into the business which could help ease the network's balance sheet woes.
However, in Ten's update this morning McLennan said: "TEN urges caution in dealing in its shares on the basis of media speculation about potential transactions involving the company."
Indeed, managers have the responsibility to maximise shareholder returns, but they must also try to limit volatility in the share price. By urging investors to not speculate on a potential transaction, Ten is keeping its shares fairly priced until such an announcement is (or isn't) made.
The financials
Australia's free-to-air networks are facing strong industry headwinds as advertisers and their audiences continue to avert their attention online, and to streaming services such as Netflix. Indeed, Seven West Media Ltd (ASX: SWM) was yesterday forced to raise $150 million in capital which will be used to reduce its growing pile of debt.
On an encouraging note, Ten Network this morning said that its primary 'Ten' channel had experienced its best start to a ratings year since 2012, thanks in part to the successful launch of three new shows so far in 2015. Ten said that its total audience size had risen by 22%, while its viewers in the age bracket of 25-54 had risen by 25%. The network will continue to target that audience by delivering relevant content such as premium live sports events.
Meanwhile, television costs (ex-selling costs) were reduced by 2.1% following a company restructure in 2014. Over the year, these costs are expected to fall by 8% which is in line with the guidance provided in October. With net debt sitting at $92.3 million as at 28 February, the company elected to not pay an interim dividend.
