Ten Network Holdings has suffered a 90.5 per cent drop in annual net profit but promised a turnaround in its fortunes after a difficult restructure.
Net profit fell from $150 million last year to just $14.2 million, largely due to $85.4 million on restructuring costs, including the new announcement of program write-offs related to sports programming on its ONE channel.
“As we worked through an independent review of all of our sports programming, many of them were loss-making and really had no opportunity to ever be profitable,” the broadcaster's interim chief executive Lachlan Murdoch said.
He also said the result draws a line in the sand and much of the the benefits of its eight-month restructure will be seen in 2012.
“Our 2011 fiscal year results reflect an unsuccessful strategy that we have spent the better part of the year rectifying by taking the tough decisions around costs and programming. We remain on track with the operational and strategic review and will focus on actions that will create a platform for the business to outperform.”
However, Deutsche Bank analysts warned that in the current market environment, "Ten remains a high risk turnaround proposition until the platform is stabilised and the alarming slide in the core channel’s ratings is reversed".
Murdoch said that prior to the restructure, costs had grown by an unacceptable 16 per cent over the past two years, the broadcaster's brand message was confused, and sales were not integrated across platforms.
Next year, costs will remain flat although it will still be spending more than $50 million on new TV content.
"It is our largest committment ever to domestic Australian content as well as our fantastic overseas shows," Murdoch said.
Its ONE channel is now aimed at males aged 25-54 rather than a sport-centric channel and ratings have climbed.
Ten recently revamped its news lineup and it is set to launch a breakfast show to rival Today and Sunrise in early-2012.
Murdoch said the breakfast TV market attracts about $100 million in annual advertising and sponsorship but Ten's current kids TV lineup only attracts about $3 million.
Contact this reporter at bswift@www.if.com.au or on Twitter at @bcswift.