TVNZ’s result shows outrageous ad fortunes of 2009 on the improve
Turns out TV isn’t dead: in the middle of what TVNZ chief executive Rick Ellis calls “the media industry’s greatest international downturn”, the national broadcaster has reported underlying earnings of $12.9 million for the financial year to 30 June, a $2.8 million (28 percent) increase on the previous financial year.
“The hard work of management and staff to respond rapidly to the downturn in advertising revenue, to reduce costs and maintain advertising market share [share of advertising revenue held constant at 60.6 percent] have produced this great result,” Ellis says.
This ‘great result’ has largely been put down to cost cutting, with TVNZ’s total operating costs of $342.4m down by $32.3 million (8.6 percent) and total revenue at $355.3 million. Of course, a lot of those cost reductions came about as a result of decreases in management and staff levels, but, overall, the numbers do seem to suggest it’s a case of things being on the improve for TVNZ and, with recent rate card increases, things look likely to improve even more in the coming quarters. Despite the doomsayers, the old media dogs (not just in television, either) are doing fairly well and they appear to have learned a few new revenue generating media tricks.
As a point of comparison, the ASA’s ad spend figures released in March showed that total television advertising revenue had dropped by 12 percent to $570m, a decline of $77m over the previous year. TVNZ’s advertising revenue was $284.3 million, a decline of $14.1 million (4.7 percent) on the year prior, which isn’t too bad considering how much pant-dropping and deal-making TVNZ did in 2009.
Labour’s broadcasting spokeshuman Brendon Burns did acknowledge the good financial performance of TVNZ during the recession, but, not surprisingly, like a good member of the opposition, he also found fault with it, because more than 80 staff were cut last year, something he sees as evidence of ensuring a dividend is paid to the government no matter the cost (this time the dividend was $4.87 million, up from $1.47m the year before).
For Ellis, the highlights of the year included TVNZ programmes making up 20 of the top 20 most watched by New Zealanders, the launch of the company’s first digital pay TV channel TVNZ Heartland (which by all accounts has had pretty good numbers on the Sky TV platform), extending the highly acclaimed TVNZ Ondemand service to the Sony PlayStation 3 and launching a successful iPhone news application.
“While TVNZ has adapted to the new digital era better than most, the economic recovery remains patchy,” Ellis says. “The company needs to continue to be mindful of costs but also not be afraid to continue with its strategy of transformation and diversification. The company has come through the recession well and is cautiously optimistic about the year ahead.”
Sky also released its results last week (and also announced it was planning on developing a new service for the internet), with combined Sky/Prime ad revenues at $54 million for the twelve months till June 2010. This was down from $58 million for the previous year, which was an annus horribilis for the ad team, with double digit YOY ad revenue declines for three-quarters of the year.
Of course, Sky doesn’t rely quite as heavily on ad revenue. It gets a regular supply of funds through its subscribers, with ad revenue to top it up. But the first half of 2010 has been a different and much better ad revenue story, with year on year revenue growth of three percent for the January-March 2010 quarter and eight percent for the April-June quarter.
Overall, there was 16.9 percent rise in annual profit, with a 7.2 percent rise in revenue and three percent increase in subscriber numbers. Its joint venture with Fatso (it holds 51 percent of shares) also improved, with subscribers jumping from 12,348 to 15,186.
John
August 31, 2010
As a long retired Ad Man, I wonder if TVNZ have considered how they will go next year when they bite the hands that feed them 90% of their business. How will the Industry react to their new 10% commission rate ?! At least the weather will be sunny in January, when they find out.
jason brown
August 31, 2010
Stop Press lauds a $12.9m profit as evidence of TVNZ "improving" – but to what end?
Why is the National government so strict about expecting a dividend from a state broadcaster (!) when it has been as enthusiastic as Labour in propping up other state enterprises to the tune of billions of dollars?
How many Leaky House Syndromes, overseen by horse racing Supreme Court judges, do we need to detect that the much vaunted private sector model – supposed to provide much greater efficiency – is a dud when it comes to strategic assets like power, water, roads, internet, yes, news.?
Privatise One and Two if we must, for they are already far down the track to being completely commercial animals, but this should not absolve government of the responsibility to inform its citizens.
State broadcasting is badly needed to counter the corporately-correct bubbles which burst so spectacularly is now known by an acronym – GFC, the Global Financial Crisis.
Lack of independent and investigative journalism from TVNZ ensures Kiwis are doomed to repeat mistakes like LHS and all the other multi-billion rorts currently consuming so much of our time. Oh, and money.
Lars Ulrich
August 31, 2010
John,
Sadly it seems as though agencies are preparing to bend over and take it up where the sun doesn't shine.
Until agencies unite in some way, TVNZ will win thru divide and conquer.
Notice how TV3 & Sky/Prime are waiting on the sidelines….quietly…..too quietly…….