Early poll would set off advert headache

Brent Impey

An early election could leave political parties struggling to get television advertisements on air, CanWest MediaWorks' chief executive says.

Brent Impey said yesterday that it would be difficult for CanWest's TV stations to accommodate political advertising if a general election were held before July, because advertising slots were booked solid.

He made the comment as CanWest reported a 12 per cent jump in trading profit to $37.9 million for the six months to February, from $33.7 million in the previous corresponding period, and disclosed a maiden dividend of 4c a share.

The profit gains were largely driven by a 27 per cent increase in trading profits for the company's television arm, TVWorks, to $20.2 million. Its radio arm increased trading profits by 7 per cent to $19 million. Overall, group revenue rose 8 per cent to $124.6 million.

Impey said the firm had benefited from the sustained strength of the economy but, while he did not expect the level of growth the company enjoyed in 2003 and 2004, there was "every reason to believe the market will remain firm" despite economists' talk of a slowdown.

"In my experience, election year is never a year of slowdown."

Impey said about $3.2 million was budgeted for election ads on radio and TV. Television would usually get 75 per cent, and radio the rest. CanWest's stations would expect to get up to 40 per cent of the TV spending, targeting its youthful audience.

That could push advert prices up - but it would be difficult to spend it all in a period when demand for advertising revenue was still firm.

CanWest's TV advertising prices for March to June 2005 were up 7 per cent on average compared with the same quarter last year, with demand firm but not at the double digit levels seen the year before.

TVNZ's general manager of sales, Lauren James, said it was true that available advertising space was "tight" but TVNZ could accommodate an early election if it eventuated. "It won't be easy," she said.

Despite a result that analysts covering CanWest branded "solid", the company's shares closed down 7c at $1.93 a share.

Analysts said the drop was partly due to profit-taking and partly to investor nervousness over companies exposed to the domestic economic cycle. "In this kind of environment, a stock clearly has to produce good results just to stand still," Macquarie Equities research head Steve Hodgson said.

Impey said the full-year trading profit of less than $61 million "should be exceeded" but noted the first half was likely to be stronger than the second. Analysts were expecting the company to report a full-year profit of $68 million.

UBS research head David Lane said the result was "in line with our expectations and we think they can exceed their [full year] forecasts but there is a lot of caution in the market towards domestic cyclicals".

The launch of TV3's new current affairs programme, Campbell Live, on March 21 was the most significant initiative for TVWorks during the six months to February, and Impey said the show had beaten expectations averaging a 28 per cent share of the 18- to 49-year-old audience in major cities - ahead of its competitors.

Campbell Live's audience peaked at 36 per cent. Its lowest rating, 21 per cent, was on the Thursday before Easter.

The strong ratings were also flowing back to boost TV3's 6pm news slot. If ratings continued to be strong, growth in revenue from the changes would exceed the increase in costs related to Campbell Live, said Impey.

For the second half, TVWorks would focus on building ratings with new shows such as The Medium and Medical Investigation, while a new local adventure show, a local drama and a local show featuring medium Jeanette Wilson were planned.

Another major change for CanWest MediaWorks will come next Monday, when it launches a national radio news network, Radio Live. That is expected to break even this financial year and become a profit contributor from September 1.

From Friday, Radio Pacific will broadcast talkback shows outside racing hours and, as Radio Trackside, racing programmes during racing hours, drawing a management fee from the Racing Board.

C4 results were not broken out, but Impey said it was operating at a monthly profit and getting close to averaging $1 million a month in revenue.