Free-to-air television producer and broadcaster Ten Network Holdings Limited (ASX: TEN) posted another big full year loss of $79.3 million today, with a tough outlook based on a weak advertising market.
Net debt stood at $80.5 million as at August 31, 2014 and total television revenue declined 4.2% to $601.7 million.
Strategic thinking
The broadcaster behind channels TEN, ELEVEN and ONE has hitched its wagon to shows like Masterchef Australia, Offspring, The Bachelor and The Living Room with some success, but is still losing out in the ratings battle against Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven West Media Ltd (ASX: SWM).
Sports rights are supremely important in the world of free-to-air broadcasting and Ten's $55 million splurge on broadcasting the Sochi Winter Olympics and Glasgow Commonwealth Games was strategically questionable given the lack of a broad based appeal to your average Australian sports fan.
Ten does have the rights to cricket's T20 Big Bash League sponsored by fried-chicken merchants KFC and will be hoping its initial popularity continues through the coming summer. 2015 will also see the return of V8 Supercar racing to the Ten network.
Other new shows to whet the appetite for the year ahead include I'm A Celebrity…Get Me Out of Here and Shark Tank. The strategy to focus on younger viewers is interesting given their attention is increasingly being drawn to other forms of media, compared to an older generation more naturally drawn to the television.
Headwinds
Ten faces two other long-term headwinds in the form of the migration of advertising revenue away from free-to-air television to online platforms and other media. This new media is also increasing competition for the attention of Australian viewers who are spending more time online than ever before.
Compared to the other big broadcasters Ten is already run on a low-cost basis and more cost-cutting could be self-defeating. However, being unable to turn a profit Ten will likely need to lean on some of its powerful backers and investors if it is to get its house fully back in order.
Shares have dropped to 18.5 cents and are down around 36% over the past year.
