Loss ahead, despite gain for TVNZ
One figure that stood out in the strong TVNZ result yesterday was the zero in the “income tax” column.
That was a stark comparison with the $4.2 million the organisation paid the same time last year.
TVNZ chief executive Kevin Kenrick said it had to do with the state broadcaster’s annual result forecast.
“We are forecasting that we are not going to be earning the profitability to be paying tax on,” Kenrick said.
“We are going to continue to invest in the business at an accelerated rate to build our online scale and to migrate our content from international to local.”
None of this is a surprise. Last July, Kenrick flagged to the Government that the state-owned broadcaster was expecting to make a $17.1m loss this year.
“The only thing that’s different now is that our revenue growth has been much stronger than what was forecasted,” said Kenrick.
TVNZ’s interim report for the year ended December 31, 2019, showed operating expenses rose from $147m to $152m year on year, while advertising revenue lifted from $163m to $170m.
This contributed to an interim net profit of $15.8m for the six months, up more than $5m on the figure posted the year before.
Much of TVNZ’s investment is being put towards local and on-demand content. Kenrick has long suggested possibly introducing an on-demand paywall and refused to pour cold water on the idea yesterday.
“Never say never,” Kenrick told the Weekend Herald.
“But, at the same time, we think the area that is our core strength and capability is delivering for audiences and delivering for advertisers. And we think it’s pretty compelling for viewers to get great content for free.”
TVNZ’s strong start does, however, come at a time of growing concern in the advertising industry about the impact the coronavirus outbreak may have on the willingness of businesses to spend money on advertising.
“What we tend to find is both travel and advertising are cost lines that businesses tend to go to quite early,” said Kenrick. “At this stage, it’s really uncertain.”