Hit series boost Seven's profit

SYDNEY - Seven Network, Australia's second-ranked television network, said first-half earnings rose 19 per cent after it gained in ratings and lured advertisers with shows such as Desperate Housewives and Lost. Seven's shares climbed to a record.

Seven, 43 per cent-owned by billionaire Kerry Stokes, said net profit for the six months ended December 31 rose to A$65.5 million ($74 million) from A$54.8 million. The year earlier result included a one-time gain of A$16 million from the sale of its stake in mobile phone operator B Digital.

Stripping out the gain, profit was up 69 per cent and the company raised its interim dividend to 12Ac a share from 8Ac last year, which helped to push Seven shares to an all-time high of A$9.30.

Sales rose 0.3 per cent to A$663.7 million.

Seven, which has eight of the 10 most watched programmes this year, may end rival Nine Network's five-year reign as ratings leader after winning viewers with its US dramas and local shows such as Dancing with the Stars. The new programmes boosted Seven's share of the television advertising market 2 percentage points to 32.9 per cent during the half.

"The growth in earnings should really start to motor ahead of the rest of the market," said John Grace, who helps manage the equivalent of A$4.1 billion at Ausbil Dexia in Sydney, including 2.8 million Seven shares. "They really are only just starting to convert the gain in ratings share into revenue share and that will drive profit margin improvement."

The stock has returned 27 per cent to shareholders in the past year, including dividends, as the company rebounds from a three-year ratings slide that pushed it to rank third in viewers behind Ten in August 2004.

The broadcaster is winning the ratings race so far this year with second seasons of last year's hit shows and popular new dramas such as Commander in Chief, which debuted as the No 3 watched programme with 1.7 million viewers in Australia's five largest cities.

- BLOOMBERG