TVNZ Half Year Result

TVNZ Half Year Result

Television New Zealand today announced a first six month financial result of $19.7 million, down $3.6 million on the same period last year.

TVNZ Chief Executive Rick Ellis said today that the reduced result was mainly because of a reduction in advertising revenue from July to December 2006 and an increase in interest costs as a result of the company taking on debt following last year's capital structure review.

Operating revenue was down from $221.7 million in the six months to December 2005 to $205.1 million for the six months to December 2006. Operating expenses, however, were significantly reduced from $186.8 million to $173.3 million. Interest expenses from the extra debt the company took on went from $41,000 to more than $2.1 million.

Mr Ellis said the second half of the financial year was looking weak.

"Traditionally TVNZ has earned most of its profits in the first half of a financial year. When you combine that with a continuing weak advertising market and fragmentation of audiences the second half of the financial year is going to be challenging for the company.

"The TVNZ management team will continue with its cost reduction and containment plans. We are still dealing with the legacy of the high cost structures the business created during the boom revenue period of 2002 to 2005 and the falling audience share during this time.

"We believe the final six months of the financial year will be difficult but are confident of turning the business around in the following two financial years so that TVNZ returns commercial and public value to New Zealanders."

He said the critical part of this was TVNZ's new five year strategic plan, "Inspiring New Zealanders on every screen", which was released in December 2006. This plan aimed to make TVNZ the New Zealand content leader and partner of choice for other content platform providers. But it required a transformation of the business and an internal team of staff were in the midst of designing a new structure for the organisation to do that.

"This will, unfortunately, result in significant job losses in the second half of the financial year and that will bring with it restructuring charges which will also fall in the 2006/2007 year."

From a programming perspective, he said, the first half of the year saw TVNZ reasserting its prominence as New Zealand's public broadcaster through commercial-free coverage of two significant national events – the tangi of Maori Queen Dame Te Atairangikaahu and the unveiling of the New Zealand memorial at Hyde Park.

New Zealand programming continued to bolster TV ONE, with a Friday night lineup of NZ House and Garden and Kiwi Kitchen performing well and the Saturday Arts programmes, The Book Show and New Zealand at Home, also well received. The local version of Dragons' Den drew successful audiences, particularly in the Auckland urban market. Sunday Theatre was reintroduced in November, attracting improved ratings.

ONE News picked up "Best News" at the Qantas Television Awards and Close Up continued to perform strongly across all demographics.

At the end of December, TV ONE achieved an increase in audience share for the first time since 2003.

TV2 was again extremely strong, with first quarter record ratings for the finals of Desperate Housewives and Grey's Anatomy. Shortland Street maintained its dominant position at 7pm.

TV ONE and TV2 between them broadcast all the top rating 20 programmes for the first half of the financial year, with the exception of two rugby tests.

In total, TVNZ commissioned 48 programmes from 30 independent producers in the six months to 31 December 2006.

Other highlights of the first half of the year included the announcement in November of Shareholder support for two new commercial-free digital channels on the Freeview platform and the announcement in December of a new online service, TVNZ ondemand.

Visit the TVNZ publications website to view the full version of the 2007 Interim Report here: http://tvnz.co.nz/view/page/816460/845018

ENDS

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