Charting Ten’s Financial Tumble
Given increasing media speculation about an imminent ownership change at the Ten Network, this report charts the main factors which led to the television group’s dramatic decline in profitability over the past decade.
In fiscal year (FY) 2005, Ten was Australia’s most profitable television network. Nine years later, after almost continuous annual declines in earnings and margins, the network reported a sizeable operating loss in FY 2014.
In brief, a flawed programming strategy over a prolonged period of time led to a significant loss of viewers at Ten, especially during the five calendar years between CY 2009 and CY 2013, which unfortunately coincided with a period of volatile, but essentially flat, growth in total metropolitan television advertising revenues.
Those two developments combined to transform Ten’s record $319 million operating profit (as measured by earnings before interest, tax, depreciation and amortisation or EBITDA) in FY 2005 into a $79 million EBITDA loss by FY 2014, as shown in Charts 1 and 2.
And as a result, about $2.7 billion in shareholder equity value at Ten was eroded over that same period, with the group’s market capitalisation falling from $3.4 billion at the August 2005 balance date down to only $0.7 billion by end August 2014.
You can download the full repost here: Download