CRASH: The Ten Network Holdings Limited share price tanks

The Ten Network Holdings Limited (ASX: TEN) share price has tanked 15% following the release of its half-year profit results.

Ten Share Price

TEN share price

Source: Google Finance

The chart above compares the Ten Network share price versus the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price over the past year.

What happened today?

This morning, Ten Network released its half-year report showing a 2.5% fall in revenue and a net loss of $232 million, down from a profit of $13.4 million in the same period last year.

Included in the result, the company suffered a $214 million non-cash television licence impairment charge.

“The above-market revenue growth and increase in revenue share during the first half of the 2017 financial year was driven by investment in local content and the audience momentum TEN has built in recent years, along with the continued success of our partnership with Multi Channel Network Pty Ltd [‘MCN’]”, Ten CEO Paul Anderson said.

“However, as we flagged in the 16 February trading update, the growth in revenue was not enough to offset the weak conditions in the television advertising market and the Company’s increased content and other costs.”

The company is currently seeking to transform its business. Transformation costs are expected to impact Ten Network’s financial results from the start of its 2018 financial year.

Concerningly, the company’s $200 million debt facility will expire in December 2017. At the reporting date, $45.5 million of debt was drawn in the facility. However, that figure had expanded to $66 million by yesterday and is expected to increase again before the debt facility expires.

Ten said it intends to secure a new facility of up to $250 million for its transformation and needs to secure it, “to meet its repayment obligations under the existing Facility”.

“The New Facility is also required as a result of expected future trading performance and volatility within the free-to-air television advertising market,” the Director’s report read. The company said that its significant shareholders are guaranteeing its debts, but have demanded that the company demonstrate an improvement in future earnings in order for the new debt facility to be guaranteed.

“The Directors consider that it is reasonable to expect that the Group will be successful in the matters as detailed, and accordingly, have prepared the financial report on a going concern basis such that no asset is likely to be realised for an amount less than the amount at which it is recorded in the interim financial report at 28 February 2017.”

Looking out to the full year, the company expects to report a full-year underlying operating loss of between $25 million and $30 million, unless they get some relief with regard to the government’s television licence fees.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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