TVNZ focuses on digital growth as ad revenue falls
TVNZ’s net profit plummeted by 78 per cent in the year to June 30 as a weak advertising market took its toll on the public broadcaster.
The state-owned television group’s net profit after tax fell to $1.7 million in the last financial year, down from $7.9m in 2022.
A tough year saw earnings before interest, tax, depreciation, amortisation and fair value adjustments (ebitdaf ) fall to $14.07m from $26.09m the year before.
The slowdown in the advertising market was the major factor in the earnings decline, with ad revenue dropping from $321m in 2022 to $308.9m.
Overall revenue fell to $327.6m from $341.6m a year prior.
Following the sharp drop, TVNZ will not pay a dividend to the Government.
The group last paid a dividend following the 2020-21 financial year when it reported a $59.2m net profit.
TVNZ adapted to the drop in income by slashing expenses. Total operating expenses fell from $315.6m to $313.5m.
The commercially funded media group deferred some programming until next year to keep a lid on costs. Total content costs hit $178.8m, a 5.6 per cent decrease year-on-year. There were some bright spots in the digital side of the business, however, as digital revenue grew by 14 per cent year-on-year.
The TV group’s revamped streaming service TVNZ+ now reaches more than a quarter of New Zealanders daily, the broadcaster said, citing NZ on Air data.
TVNZ said it was focused on “ensuring digital growth outpaces any anticipated declines in broadcast television”, adding it remained committed to investing in its digital offering.
TVNZ acting chief executive Brent McAnulty described the year to June as a “challenging” period, with the first half affected by “some disruption” around the abandoned merger with RNZ that would have formed Aotearoa NZ Public Media.
He told BusinessDesk that government and commercial advertisers had eased back this calendar year. “It’s been hard for all commercial media operators since we got back from the summer break, and we’ve all had to address costs.”
Regarding the lack of dividends, McAnulty said the broadcaster would
“need to talk to the new Government about our ambitions and where dividends fall” and future expectations around potential returns.
The results come as TVNZ edges closer to naming a new permanent CEO, with an appointment set to be made by the end of the year.
McAnulty would not confirm whether he was in contention for the role. The incoming leader will replace Simon Power, who unexpectedly quit in April.
The broadcaster is set for another period of change following the election.
Outgoing Broadcasting Minister Willie Jackson overhauled the TVNZ board in June, appointing NZ Film Commission chair Alastair Carruthers as chair and hiring Ripeka Evans, a director on Crown, iwi and investment boards, as deputy chair.
Jackson signalled plans to reshape the culture at TVNZ and drive a public service-focused strategy. With National preparing to take power following the general election, McAnulty said TVNZ would continue to adhere to its mandate.
“I’m not expecting a huge change with the new Government. We’re yet to see the make-up. We’re governed by the Television NZ Act, and that’s the guiding document for us.”
The television broadcaster is braced for further financial strain in the current financial year. The group expects inflationary pressures to continue into
2023-24. In its recent annual statement of performance expectations report, the group forecast a $15.6m loss for the year to June 2024 and another dividend-free year.
Investment in the broadcaster’s capabilities to deliver content over the internet will also place significant pressure on TVNZ’s bottom line in the coming years.
The group’s new IP platform, which involves a shift to a cloud-based engine, and its wider digital transformation programme are expected to cost more than $100m over four years.
TVNZ’s profit decline is the latest sign of a severe downturn facing the media industry. Discovery NZ, the owner of TVNZ’s rival Three and regional division of Warner Bros Discovery, lost more than $34m for the second consecutive year in
2022.