$232m loss: TEN seeks new financing to remain “a going concern”

TEN has cast doubts on its ability to continue as a “going concern” unless it can refinance debts, cut costs and see relief in TV license fees.

Today it reported a $232m loss for the first half of the financial year, writing down the value of its broadcasting licence to $132 million.

The network has instigated a “transformation program” across its business, and will be reliant on its billionaire shareholders which includes Bruce Gordon, Gina Rinehart, Lachlan Murdoch and James Packer plus Foxtel to secure new funding.

“As a result of the matters disclosed, there is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern, and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business,” Auditors PricewaterhouseCoopers noted in the director’s report.

“The directors consider that it is reasonable that the group will be successful in the matters detailed and, therefore, have prepared the financial report on a going concern basis that no such asset is likely to be realised for an amount less than the amount at which it is recorded in the interim financial report.”

This morning TEN Network Holdings reported a 2.5 per cent decline in revenue to $340 million, and recorded a $214.5 million impairment on its television licence.

The impairment charge increased a $2.4 million loss to $232 million for the first half of 2016-17.

A 2.7% metropolitan ad market share gain was “not enough to offset the weak conditions in the television advertising market and the Company’s increased content and other costs,” CEO Paul Anderson said this morning.

“TEN has commenced a transformation program to improve all aspects of the business.

“Despite The Biggest Loser: Transformed not performing, our investment in local content continues to build a strong platform, with Australian Survivor, the KFC Big Bash League and I’m A Celebrity…Get Me Out of Here! performing very well for the network.”

Conclusions from the transformation process will be advised to market at a later stage.

Source: Fairfax, Mumbrella, BandT

18 Comments:

  1. Whatever. I know quite a few people here like it, but in my opinion any network that broadcasts drivel like Gogglebox deserves to go under.

  2. Networks like Ten survive with the support of advertisers.

    Advertisers buys spots or sponsorships of quality content.

    Garbage like The Bachelor and Im a Nobody stripping 5 nights a week alongside expired formats like Family Feud and Modern Family re-runs is not good content. It looks cheap and tacky, It rates average at best and long term quality advertisers dont want to associate with it or buy it.

    Ten need to do a complete re-think about who they are, who their target audience actually is and build programming for that audience.

    The stench of death around them at the moment also cant be good for market confidence. I have heard they owe tarps all over the place due to the implosion of the Biggest Loser and you cant near The Project or Masterchef for months due to make goods.

    As far as Big Bash, look for it on Nine and Foxtel next year.

  3. I recall Prime Media writing down the value of their television licences last year, that turned a profit into a loss.

    It’s not accounting trickery folks! Considering the licences are a major asset of these businesses​, if they’re not worth as much then that has to be taken into account. Just like any other publicly listed company would do if an asset lost value.

    Ten’s problems are ongoing, that is clear.

    Another one is looming – their bargain BBL rights are over after next season. The only way I can see them retaining anything is with a partnership with Fox Sports, they just don’t have the cash to go it alone. Whatever happens to the rights will only increase the headaches at Ten, they’ll either be paying a lot more for exclusivity or will lose some or all of that vital cross-promotion. I don’t envy their management one bit…

    • Yes it is an asset written off to a lower value because it is worth less and in that sense it is a loss to the investors. As far as the accounting trickery goes what I meant is that it is only an accounting entry and not a physical loss of cash i.e. there is no less money in the kitty because of it.

    • An accounting adjustment. Unlike a piece of machinery, a TV Licence is an “Intangible” asset, a sheet of paper that is used to earn money. It’s “book value” is an assessment, loosely based on the amount of revenue that it can provide. Problems arise when the “book value” is used as collateral to borrow money. It’s no surprise that the money-lenders have asked for loan guarantors in case the “book value” is re-assessed.
      James Packer may no longer want to be a guarantor, Gina’s investment in TEN may not have given her the expected results and Bruce gets a seat at the table when the vultures circle.
      A $2.4 million operational loss is about $100k a week so the transformation program won’t be too harsh.
      With the previous losses TEN won’t be paying much in taxes.

  4. keyboard_warrior

    Australia’s television market was always too small to support 3 networks. Now with more channel offerings by networks & svod etc, it is now 100% too small and this is reflected in these losses. Sooner or later 1 is going to pack it up (sad as it is) and peoples fingers (including the shareholders who have jumped out) are pointing at Ten. How long will Packer, Murdoch and Gordon keeping their wallets open?

  5. I am so confused.

    Ten had enjoyed ratings and advertising share growth over the past three years, even performing with the BBL, Bachelor/Bachelorette & Survivor. MasterChef topped non-sports programming in 2015.

    Now they’re up ‘Ship Creek’ again 😉 :/

  6. Ten lost $379m in six months. With BBL broadcasting deal to be expired in 2018, then the next BBl rights deal from 2018-23 will be much higher.

    • Maev....Sydney

      Nine wants ‘all’ the cricket this time and at a cheaper price…they were really ticked off that they paid $500 million for most and TEN got BBL for $20 mil…Not that I know a lot about cricket…just read this in the past few days…forgot source …sorry.

  7. As JoeS says this is just posturing and accounting trickery to get refief from the federal government for FTA commercial TV licence fees, once the fees are reduced or the minister says no there will be a “miraculous” recovery in the finances of Ten – exactly the same thing then Qantas went crying to the Federal government for help a few years ago.

  8. Almost word for word the “related” story from 2 years ago.

    Thing is, alot of us both here and other sites have plenty of ideas that will help Ten ranging from schedule improvements, schedule stability, shows that work, shows that don’t, same day as US airing of US content, trying different ideas including late night talk shows, etc – things that could just work to help turn the network around – but Ten is to corporately run (which I know they have to to a degree to stay in business) to listen to what viewers actually want.

    Why not try something different and put it to the people? Ask us what we want from the network – make it a vote & fun etc and then apply the results. 2Day FM did something like that in Sydney in 1990 and went from no ratings to top radio station at the time.

  9. $264 Million loss in 2015… and how much was it the year before? Failing network needs another lifeline. I’m hoping it won’t be the government. Long live Foxtel!

  10. So a $214 million impairment increased the loss by $230 million? Seems like someone cooked the books…

    All said and done the headline figure of $232 million loss is slightly misleading as the majority relates to the impairment i.e. a book entry and the real loss was $2.4 million. It should also be noted that all the PwC note is doing is drawing attention to the fact that the company has financial issues but at the same time have plans in place to ensure they carry on as a going concern.

    It should also be added that unless PwC had a whole heap of assurances that the backers will provide the finance, they would not have added that note but would rather have had a more severe qualification to the accounts. Reading between the lines 10 looks safe for at least another 12 months…

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