TVNZ annual profit sinks 55%; resumes full dividend payment

Friday 26th August 2016

Television New Zealand reported a 55 percent fall in annual profit as it booked losses from foreign exchange markets and faced declining revenue. Still, it resumed full dividend payments as it nears the end of refurbishing its Auckland headquarters, paying out more than it earned in the year.

Net profit fell to $12.7 million in the 12 months ended June 30 from $28.1 million a year earlier, the state-owned free-to-air broadcaster said in a statement. Excluding a $4.8 million foreign exchange loss, earnings were in line with the $16.2 million profit forecast in TVNZ's statement of performance. TVNZ announced a dividend to the government of $13.4 million, up from $8.3 million, signalling a resumption to full payments after a reprieve while it refurbished its Auckland CBD building.

Revenue fell 6 percent to $303.9 million, as advertising sales slipped 3.3 percent, government funding reduced, and a one-off gain on the sale of the archive in 2015 wasn't repeated.

"Audience share reached a five-year high powered by market leading news, current affairs and local entertainment programmes," chief executive Kevin Kenrick said. "Off the back of this audience improvement, TV advertising revenue share strengthened from 60.8 percent to 61.3 percent."

Broadcasters have been fighting more aggressively for premium content with the emergence of online video streaming services such as Netflix and Spark New Zealand's Lightbox, which pay-TV operator Sky Network Television today described as an "arms race".

TVNZ's Kenrick said the state-owned broadcaster was attempting to compete with global online players through its KPEX joint venture with Fairfax Media, MediaWorks and NZME to create a local online advertising exchange, with mobile devices driving online video consumption to an average of 10 million video streams per month.

The media and telecommunications sectors are going through a period of convergence where the lines between the two are increasingly blurred, prompting potential mergers between Sky TV and telco Vodafone New Zealand, and between Fairfax's New Zealand assets and NZME.

In the case of publishers Fairfax and NZME, their argument to the antitrust regulator in favour of allowing the deal is that they can't compete in digital advertising against online rivals such as Google and Facebook without combining their resources and that audiences and advertisers are agnostic as to the platform they use to get information.

Those publishers have adopted a 'digital first' strategy, prioritising online editorial and advertising over their traditional print businesses, even though their combined offering has a meagre 11.7 percent of New Zealand's digital advertising market - $10.4 million in annual terms for Fairfax and $10.8 million for NZME. They were up against Google, ranked first with $67 million, or about 37 percent, followed by Facebook with $29.5 million, or 16 percent.

TVNZ has submitted against the proposed SkyTV/Vodafone merger, arguing Sky should have to divest its free-to-air Prime channel. In its results today, Sky showed Prime advertising falling in seven of the last nine quarters, and totalling $24.7 million in the last financial year, compared with $24.3 million a year earlier.

BusinessDesk.co.nz

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