Just days after a share raid by James Packer unleashed a barrage of criticism of Ten Network’s strategy, chief executive Nick Falloon has answered by posting a net profit for 2010-11 of $150 million, an impressive turnaround from last year’s $90 million loss.
However, Ten’s forecasts for the coming financial year appear to have given Packer plenty of ammunition for his proposed restructuring.
While Ten says revenue is currently running about 6% ahead of last year, costs in the company’s key television unit are set to climb 11% over the full financial year, as Ten pours $20 million in its new current affairs and news programming and starts a third digital channel called Eleven, aimed to younger viewers.
While Falloon was guarded in his comments about Packer’s potential strategic changes at Ten, he did say he was pleased to see the mogul – who Falloon previously worked with at Publishing & Broadcasting Limited – join the share registry, describing it as “positive for our other shareholders”.
“We welcome their interest in our company and return to the free-to-air industry,” Falloon told reporters at a media briefing yesterday.
“We are happy to see someone like James Packer take a positive investment in the company. He obviously understands the strategy… and that’s encouraging for the company.”
Falloon said Ten executives had held a brief conversation with Packer, who was currently overseas, and a meeting would be held “at some stage in the near-term”.
He also refused to rule out engaging an adviser to provide guidance on Ten’s new powerful shareholder.
However, Falloon isn’t backing away from Ten’s multi-channel strategy, which reports have suggested Packer may be keen to dismantle.
Ten is determined to have three distinct platforms: channel Ten, which is says is aimed at families with a heavy news component; channel Eleven for the youth market; and One HD for sports lovers.
While analysts have said the cost of running three channels is too high – particularly at One HD, where Ten has had to invest heavily to secure sporting rights – Falloon is committed.
“We are reinvesting in the business because we are now in a multi-channel world,” he said.
At well as rising cost numbers, Falloon’s other numerical problem is Ten’s ratings. According to a report in The Australian, in the current week, Ten’s channels has captured just 23.3% of Ten’s key 18-49 years old demographic, compared to Nine’s 33.2% and Seven’s 28.7%.
There was one extra bit of bright news for Falloon and Ten’s bottom line yesterday – the company revealed it is expecting to receive a tax refund of $53.2 million later this year after amendment from the Australian Taxation Office.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
