Ten’s poor ratings turn into losses

The troubles of the last 12 months finally came back to hit TEN’s bottom line.

The company reported a full-year net loss of $285 million, which was worse than the estimated $277 million consensus figure.

The losses were forewarned in April as a one-off $292.1 million licencing impairment charge was booked and an additional $44.1 million in operational charges took the final hit to the bottom line to $336.2 million.

Stripping these one-off fees and charges out of the figures, the underlying net loss totalled $5 million, which was also weaker than the expected $1.9 million consensus loss. EBITDA of $46.1 million was in line but the stagnating advertising market coupled with poor ratings has taken its toll, despite the fact TV sales hit $673.4 million which was a beat on expectations as cost cutting of $548 million fell short of the forecasted $560 million – which is disappointing.

TV Guidance

Since taking the helm of TEN, CEO Hamish McLennan has been shifting Ten’s target audience and media strategy. The loss of market share over the last three years has seen TEN under real threat of losing third position out of the free to air channels to the ABC as viewers switch off, and this has seen advertising dollars going with them.

McLennan’s new strategy revolves around a target audience of 25 to 54 year olds, with a revamped morning news schedule combined with premium sports. It’s the premium sports that are the key to TEN’s future success and McLennan is banking on the Commonwealth Games in Glasgow, the Winter Olympics in Sochi and the Big Bash to deliver the viewer turnaround.

The premium sport of the winter was the Wallabies tour, the station saw solid numbers but nowhere near the expected levels. Entertainment programme Wonderland has been unable to pick up the slack from the ending of Offspring, and it is this programme structure issue that will take time to perfect as TEN looks to compete with Seven and Nine rather than with the ABC.

Technicals

From the technical side TEN is stuck in a sideways trading band. The Bollinger bands illustrate that support is strong at $0.26 with resistance at $0.34. This result is unlikely to see TEN breaking out of its 21 day mean average by more than two standard deviations and I would suggest shorting above $0.34 and going long below 0.26 as the share continuously reverts to $0.29.

Ten's share price

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