Sydney Morning Herald
October 11, 1999

TV programming is Ten's weakness


Ten Network Holdings' tight control on costs is expected to again underpin the group's annual results, due for release on Wednesday, but media analysts say the network is going to have to spend more on programming as key program contracts run dry.

Ten is expected to report a net profit of between $55 million and $60 million for the year to August, compared with $52 million a year ago.

The full-year dividend is tipped to range between 13c and 16c a share, compared with 13.3c last year. Ten only pays one annual dividend at the end of the financial year.

But there are concerns this year will be tougher for the third-ranked commercial network, as its advertising rates will be under pressure because of the weaker ratings performance this year.

Ten's ratings have dropped during the past 12 months since it stopped broadcasting the Seinfeld show earlier this year.

Media analysts said content was becoming a major issue for Ten Network as it would also lose programming from Universal Studios in 2001.

Universal, which produces popular shows such as Xena The Warrior Princess, Hercules and Law and Order, is moving to the Seven Network.

From January 2001 Ten will also lose programming from WorldVision, the makers of Melrose Place and Beverley Hills 90210, leaving the network with Columbia Tri-Star as its only major Hollywood studio.

While Ten does not receive any new programming from 20th Century Fox, it will retain existing programming such as The Simpsons and The X-Files.

''Content is definitely an issue with Ten, and that is one of the reasons why the share price has come down,'' Mr Peter Shorthouse, a media analyst with Warburg Dillon Read, said.

Ten shares ended 3c up at $2.19 on Friday. This is 18 per cent off its peak of $2.67 hit in February and just above its $2.15 issue price in its April 1998 float.

Ord Minnett media analyst Mr Andrew Swan said Ten could buy programming off the spot market, but long-term contracts might be difficult as much of the programming from the Hollywood studios was tied up locally.

Media analysts said the key figure they looked at in Ten's profit report was earnings before interest and tax (EBIT) because of the group's complicated shareholder structure. EBIT is estimated to fall between $182 million and $186 million.

Along with all the commercial TV networks, Ten suffered a soft advertising market in June and July, but a strong first half is expected to show an increase in advertising revenue of about 5 per cent.

Another factor facing Ten in the year ahead, particularly towards the end of the financial year, is the build-up to the Sydney Olympics where the Seven Network - the Games host broadcaster - is expected to increase its advertising market share.

Ten Network is the listed 80 per cent shareholder of the Ten Group, the operator of the Ten television network.

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