Rise in costs, fall in ads hit TV profit

State-owned broadcaster TVNZ posted a $14.5 million after-tax profit for the six months to December 31.

The transmission business contributed the lion's share - $9.2 million.

TVNZ will pay the Government an interim dividend of $4.7 million, down on last year's $17.1 million.

Net profit was lower than last year's $24.5 million because of continued rising programme costs and reduced advertising revenue, TVNZ said.

TVNZ is to become a crown- owned company, with obligations to comply with a charter set by the Government to be phased in from July 1, and separate television and transmission businesses.

The company will implement a new governance and financial reporting structure in the new fiscal year, and has approved a management project to help prevent the forecast continued slide in profitability.

"While the financial challenges facing the television business in an increasingly difficult market continue to be addressed, a fiscally prudent foundation has been laid for the ongoing operation of the television business."

As a crown-owned company, TVNZ's primary purpose will be to meet its charter objectives while maintaining a commercial performance.

The charter sets out nine objectives for the broadcaster to work to, including calls for TVNZ to feature programming that informs, entertains and educates New Zealanders, to ensure the presence of a significant Maori voice and to maintain a balance between programmes of general appeal and programmes of interest to smaller audiences.

TVNZ said that despite the $9.9 million fall in profit, the broadcaster's financial performance was creditable in a "challenging trading environment".

"Soft advertising market conditions saw advertising revenue down $3.2 million [2 per cent], which, while disappointing, is significantly better than many international broadcasters.

"ITV in the United Kingdom, for example, experienced a 12 per cent reduction in net advertising revenue.

"In its 2002 Global Media report, ABN Amro stated that 2001 was the worst year for advertising in 50 years, with global advertising estimated to have declined by 5.7 per cent."

A rise in income from royalties and merchandising activity partly offset the reduction in advertising revenue. The net profit after tax for the television and media business was $5.2 million.

BCL's revenue decreased by 8 per cent ($6.8 million) partly through the renegotiation of several large transmission contracts. During the period BCL won a contract with the Papua New Guinea Civil Aviation Authority for the upgrade of its aeronautical communications system.

- NZPA