Advertising revenue falls at TVNZ

By Phil Boeyen, ShareChat Business News Editor

Tuesday 18th September 2001

Profits at TVNZ have fallen by almost a third and the state broadcaster says the industry faces a significant challenge to reverse the decline in advertising revenues.

For the year to the end of June to the free-to-air broadcaster has posted a net surplus of $29.95 million, down from last year's $43.1 million.

Group revenue grew slightly by 1.6% or $7.7 million to $481.1 million but the group operating surplus at $45.6 million is well below last year's $88 million result.

TVNZ has announced its fiscal year 2001 annual results recording increased revenues, principally as a result of the company's international operations.

Chief executive, Rick Ellis, the increase in transmission related revenues, particularly from its Australian business and satellite services, offset increased costs and a decline in advertising revenue.

Advertising income fell 3.7% or $11.1 million to $284.7 million for the year.

Mr Ellis says while the company's share of television advertising revenues improved slightly during the year it is clear that the industry faces a significant challenge to reverse the trend over the past nine years, which has seen television's share of advertising revenue decrease by 6.3%.

"The increase in content costs are attributable to the rights for screening the 2000 Olympics, an increase in local content costs including news and current affairs, and the impact of a weaker New Zealand dollar on the cost of overseas programme purchases.

"Media companies worldwide have experienced similar contraction of revenues, increases in content costs and investment in internet related activities.

Despite the considerably weaker performance Mr Ellis claims TVNZ's results compare very favourably with other television companies, both in New Zealand and internationally.

Earlier this year the government announced details of the pending TVNZ charter, which will see the group's transition from an SOE to a Crown Owned Company with a greater emphasis on public broadcasting.

"The precise nature of the new Crown Owned Company is not yet known, although the government has signaled that the television business will be required to concentrate on its charter obligations while the transmission businesses will continue to maintain a strong commercial focus," says TVNZ chairman Ross Armstrong.

"Against this background of change, TVNZ has performed creditably during the past year in an increasingly competitive and complex broadcasting environment," says Dr Armstrong.

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