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TVNZ Half Year On Track

28 February 2013

TVNZ Half Year On Track

TVNZ is on track at the half year point to meet its full year Statement of Intent forecast.

Announcing the company’s Interim Result today, Chief Executive Kevin Kenrick said the first six months of the year had featured some exceptionally positive programming and consumer developments within a continuing challenging economic environment.

“The net result is that we are where we expected to be at this time.”

TVNZ has recorded operating earnings for the half year of $21.6 million – $7.1 million below the prior year. The primary driver of the year on year change in operating earnings has been increased investment in both local and international programming content.

Unaudited Net Profit after Tax was $14.2 million – $5.0 million below the prior year.

Operating revenues, excluding Government funding, were $0.6 million ahead of the same period last year with television advertising revenues down by $2.7 million (1.6%) and other operating revenue up by $3.4 million (19.8%).

The total New Zealand television advertising market contracted for the six months ended December 2012 with the absence of advertising revenue generated from the Rugby World Cup in the prior year having a significant impact. TVNZ grew its market share of television advertising revenue from 60.8% to 62.3% year on year.

Other operating revenue growth has primarily been driven by the strong performance of TVNZ Ondemand which achieved a substantial increase in advertising revenue off the back of growth in online stream views of 30% and average monthly unique viewer growth of 23% in the half year.

TVNZ continues to grow online revenue ahead of the market in New Zealand, cornering 58% of the total online video market.

“Online is currently a small part of our revenue, but it’s a big part of our future”, Mr Kenrick says.

Government funding reduced by $6.5 million reflecting the closure of TVNZ 7 at 30 June 2012, with a consequent drop in programme amortisation costs for TVNZ 7 of $5.4 million.

Investment in content for the remaining channels has increased by $10.5 million year on year.

Mr Kenrick says a significant contributor to this was the undisputed programming hit of the first six months of the financial year, New Zealand’s Got Talent, which exceeded all ratings expectations and became the most popular local entertainment series in the last ten years.

Whilst investment in programming has increased, non-programme costs have been reduced by $3.8 million (5.2%) year on year.

Other highlights for the six month period include:

• A comprehensive review of the media market and potential business opportunities culminating in the development of a refreshed TVNZ strategy for future growth.
• The December launch of Igloo – a prepaid pay TV service owned 51% by Sky and 49% by TVNZ offering a combination of free-to-air channels, 11 premium pay TV channels, and access to pay-per-view movies and selected sports events.
• An Ondemand app for Samsung Smart TVs, which was launched in early December and has exceeded all projections of viewer usage within the first month of launch.
• The introduction of new controls to moderate the sound levels of television advertisements.
Mr Kenrick says while TVNZ expects the current economic environment to result in continuing competition for advertising revenue, and the ongoing need to tightly control expenditure, there are exciting future market opportunities with the rapid growth in online video consumption and ongoing high levels of time spent watching television.

Financial Highlights Summary – Six months ended

31/12/12 31/12/11
000’s 000’s
Operating Revenue193,861 199,732
Advertising165,260 168,032
Operating Expenses(172,290) (171,034)
Operating Earnings21,571 28,698
Interest Expense(616) (956)
Financial Instruments/foreign currency gains / (losses)221 (158)
Share of Associates
(938) (600)
Income Tax expense(6,010) (7,782)
After Tax Profit14,228 19,202
Operating Cash Flow13,676 31,812
Capital Investment3,488 3,563
Dividend Paid11,287 13,828
Total Assets231,298 243,381
Debt10,000 10,000
Shareholders’ Equity157,607 154,635


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