TVNZ reports first year of stable revenues since 2012, profit up
By Pattrick Smellie
Aug. 24 (BusinessDesk) - State-owned broadcaster Television New Zealand is counting its first year of stable revenues since 2012 as a win as it reports a 58.6 percent increase in operating earnings for the year to June 30.
Total revenues of $318.5 million, an increase of 0.6 percent on the previous year, produced operating earnings of $24.6 million before interest, tax, depreciation, amortisation and changes in the value of financial instruments.
On a profit before tax basis, earnings were up 265 percent to $5.1 million, reflecting the fact that TVNZ had to write down $12.4 million against “onerous” contract terms for some of its international content. That impact has flowed through the accounts now, creating a dramatic bounceback in reported earnings as a result.
“From a financial perspective, the most significant shift is stable topline revenue,” TVNZ chief executive Kevin Kenrick told BusinessDesk. “This is the first time we have stable revenue in the past six years.”
The challenge now was to continue to replace revenues from traditional ‘linear’ TV with revenue derived from its growing revenues from online streaming, which had “hit its straps” going in the second half of the last financial year and was continuing to show strong momentum in growth, he said.
Also assisting was a continued reduction in operating costs, which fell 2.4 percent to $293.9 million.
“Cost control is a given in our sector now,” said Kenrick. “It’s the combination of the two (stabilising revenue and stable costs) that is giving us growth in earnings.”
While TVNZ had continued to grow its share of total advertising spending and the trend back towards a greater share of ad spend going to traditional TV had continued, Kenrick conceded that retail advertising had been “softening in recent months” in line with declining business sentiment.
“Retail is tough at the moment,” he said, although the company remained optimistic about ad spend growing in the lead-up to Christmas.
Total advertising revenue was $301 million, compared to $299.1 million the previous year.
Growth in online streaming saw TVNZ On Demand crack 100 million streamed views in the year to July, and a 15.2 percent increase over the year to June 30, compared to the previous year.
Its social media platform, Re, which plays shorter content and aims to attract a younger audience back to TVNZ, had recorded 30 million views during the year, with efforts to monetise the new channel a priority for the year ahead.
The revenue model for Re would concentrate on partnerships and sponsorships rather than traditional advertising, Kenrick said.