South Pacific Pictures lifts profit 5.6 percent as Shortland St provides buffer for lost shows

Wednesday 5th March 2014

South Pacific Pictures Investments, New Zealand's biggest film and television production house, lifted annual profit 5.6 percent in 2013 as long-running local soap Shortland Street helped offset the loss of two other shows.

The Auckland-based film and television producer, whose productions include TV shows Shortland Street and Outrageous Fortune, and the feature film Whale Rider, had two longer-running programmes, Nothing Trivial and Go Girls, cancelled by broadcaster Television New Zealand.

"It was an interesting year last year," said chief executive Kelly Martin. "The networks both decided not proceed with a couple of shows which had been a bit longer running for us, but things roll on and we've got other projects on the go. That's the nature of the business."

"Shortland Street is the backbone for the business really - it gives us the flexibility to do a bit more development which is the key to getting good shows," she said.

The soap opera, based on a fictitious hospital on Auckland's Shortland Street, has been running for more than two decades, since 1992.

South Pacific's net profit rose to $3.02 million in the 12 months ended Aug. 31, from $2.9 million a year earlier, according to financial statements lodged with the Companies Office. Revenue, which is generated from management fees on film and TV productions, slipped 3.6 percent to $49 million.

Operating profit before financing costs surged 85 percent to $6.58 million as a year-earlier impairment from related party receivables washed through the accounts.

In April last year, the UK's biggest independent production house All3Media bought out former chief executive and current SPP chairman John Barnett to become sole shareholder of SPP. The local production house joined a string of former locally owned businesses which are now completely overseas-owned including Natural History Unit, Eyeworks Touchdown, Screentime and Greenstone TV.

"It has always been a pretty strong partnership. They distribute all our stuff, they know about all our projects and give us input where needed," Martin said. "It's good for us in terms of international access to the market and finding out what's happening on the other side of the world. Certainly from a sales perspective they're very good at what they do."

The production house paid a dividend of $4.5 million, greater than declared net profit, in the 2013 financial year, up from $3 million a year earlier.

SPP was spun out of the state-owned broadcaster in 1998 under a management buyout led by Barnett with Britain's Chrysalis. The company has undergone a series of ownership changes, Bridgepoint bought Chrysalis' stake in 2003, which was subsequently bought by All3Media's private equity owner, Permira in 2006.

South Pacific Pictures was awarded more than $10.8 million from government funding agency NZ On Air to produce two new TV series, receiving $4.3 million in December to produce Riverstone Mysteries: My Sisters for Prime, and $6.7 million in August for Step Dave for TV2. The company has received some $220 million in funding since 1991, based on calculations using NZ On Air's funding data.

"It's always under pressure," Kelly said of the local TV industry. "I can only speak for us, when I say, we've got a lot on at the moment."

Last year the government extended film incentives to bring international productions to New Zealand shores and also introduced a new TV-specific fund to stoke activity in the sector.

"The incentives will definitely end up in new business, but it will take a little while and we're still to get all the full detail around it, and how it's going to work," Kelly said. "Like all of these things it will be project driven, and there is bound to be a project, if not multiple projects out there internationally (that) could be done here that people will look here to come and do."

"It's called an incentive and it will definitely be one," she said.

BusinessDesk.co.nz

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