INL posts $38.8 mln first half profit

By NZPA

Wednesday 19th February 2003

Media company Independent Newspapers Ltd (INL) today posted a net after tax profit of $38.8 million for the first half ending December 31, up 43 percent on the same period a year ago.

The company, nearly 45 percent-owned by Rupert Murdoch's News Corp, will pay a fully imputed interim dividend of 4.5 cents per share on March 28.

The result includes INL's publishing business and its 66.25 percent shareholding in Sky Network Television Ltd.

Sky TV pared back its losses in the period to $4.37 million, compared with a $13.2 million loss a year earlier.

INL chairman Ken Cowley attributed the strong result to an improved performance by both the core INL publishing business and Sky TV.

INL Publishing recorded earnings before interest, taxation, depreciation and amortisation (ebitda) of $63 million -- up 8 percent on the same period a year ago but just below analysts' expectations of around $67 million.

INL owns nine daily papers in New Zealand, including Wellington's Dominion Post; one Australian daily; New Zealand's two Sunday papers; the Stuff website; the TV Guide; and a range of national magazines including New Zealand House and Garden.

Sky TV continued to grow its subscriber base and reduce losses during the period, Mr Cowley said, with ebitda rising 33 percent to $71.6 million, compared with analysts' estimates of about $68 million.

Consolidated net debt fell by $47.5 million over the period, with INL Publishing and Sky TV both reducing their debt levels.

Earnings per share increased to 9.2c from 6.4c.

INL chief executive Peter Wylie said publishing's total revenue from continuing operations increased by 3.5 percent on the year ago period, largely buoyed by strong growth in advertising revenue.

Advertising revenue among INL's publications rose 5.9 percent. Adjusted for the impact of merging Wellington's two dailies The Evening Post and The Dominion in July 2002, the increase was 8.1 percent.

Community papers were up six percent and the Sundays made a gain of 12.6 percent.

Retail advertising accounted for most of the revenue growth, reflecting high levels of consumer confidence and strong regional economies, Mr Wylie said.

He said this positive trend had continued into the second half, in keeping with a worldwide pick-up in advertising spending.

Mr Wylie noted that Australian media publishing and television companies had recently revised up their forecasts on the back of an anticipated strong recovery in advertising revenues.

"For INL newspapers, major international sporting events such as the Rugby World Cup are likely to drive increased readership and advertising revenues throughout this year."

Mr Wylie said national advertising volume was down although there were encouraging signs of a recovery in this segment.

Additionally, recent initiatives by INL were designed to capture a greater share of national advertising.

INL established its own Advertising Network in November to sell space and national packages in The Dominion Post, Waikato Times and The Press.

"Early indications are that this service is proving popular with advertisers," Mr Wylie said.

Overall, the paid circulations of INL's newspapers were steady. INL's flagship metropolitan dailies, The Press and The Dominion Post, both performed well.

"The Dominion Post's audited average daily sales of around 101,000 (Audit Bureau of Circulation November 2002) exceeded our expectations, and compared favourably with the unduplicated net circulation of 103,000 for the two legacy titles prior to their merger in July," Mr Wylie said.

The Sunday newspapers had also increased circulation and the company recently announced plans to broaden the appeal of the Sunday Star Times with a view to lifting circulation further.

"The Sunday Star Times is a good paper and we want to build on its recent years of circulation growth by giving readers more value," Mr Wylie said.

A new-look paper -- which will be 20 percent bigger with new sections, including an Auckland liftout, and features to appeal to women and younger readers -- goes on sale this Sunday.

The Star Times has been under increasing pressure from major rival the New Zealand Herald, which has extended its weekend coverage.

The Herald is owned by W&H Newspapers, which is controlled by APN News and Media Ltd. APN is a subsidiary of Irish billionaire Tony O'Reilly's Independent News and Media Plc.

INL's troubled Internet division stuff.co.nz showed marked improvement during the period, virtually halving its losses on the back of increased advertising revenues.

Mr Wylie said the overall result showed INL was on track to increase earnings by focusing on circulation growth, higher advertising yields and a firm control of expenses.

During the period it bought lifestyle magazine Cuisine, took a full shareholding in the Taupo Times and sold Te Puke Times to W&H Newspapers.

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