KEY POINTS:
Television New Zealand has another year of easy access to taxpayer subsidies for commercial shows like Sunday - helping the state broadcaster to dig itself out of its profits trough.
Chief executive officer Rick Ellis yesterday reported the company earned $19.4 million profit for the year to June
30, compared to a $7.1 million loss in 2007 - its worst ever result.
Return on investment increased from minus 1.5 per cent to 8.3 per cent, and it is aiming for 9 per cent in 2009.
Despite the dismal return on $379.7 million in total income, management gave an upbeat summary of the year ahead. Ellis said that the advertising market was challenging, but the 2008 result was better than he had expected and a good result for the first year of his three-year "turnaround".
Results are still grim: $15.1 million - more than three-quarters of the $19.4 million net profit - was from controversial direct government subsidies, some of which were used for commercial shows.
Earlier this year, prompted by TVNZ use of taxpayers' money to make its current affairs show Sunday, the Government cracked down and handed control of TVNZ money for charter shows to the funding body New Zealand on Air.
But this a transitional year, and the $15.1 million will also be able to be used for commercial shows until a new system is established in 2009.
MediaWorks CEO Brent Impey has complained about TVNZ's funding advantage. But Ellis was unapologetic and said MediaWorks - which owns TV3, C4 and half of New Zealand's radio stations - had been hit by a triple whammy.
"They are in a difficult position, owned by private equity owners demanding greater return on assets, with an economy that has gone south and a competitor [TVNZ] that has got its act together," he said,
TVNZ's 1 per cent increase in advertising revenue was below that for free-to-air TV overall.
But TVNZ sales director Dave Walker said year-on-year growth exceeded expectations.
Walker said improved returns arose from the growth and stability of TV One's programming schedule.
The channel - which suffered a nadir in 2005 and 2006 - recovered with substantial spending on shows like Dancing with the Stars, Stars in Their Eyes and a big turnaround for news ratings.
TVNZ provided data for TV2 showing a major slump in its ratings in late 2007 and a recovery this year.
Ellis said that TVNZ was in a better state than he thought it would be.
"I never had quite anticipated that other media would be quite so down.
"I think we have some share from elsewhere in television, but also from other media." Retail advertisers were upbeat about the future.
But he said finance company collapses and housing valuations being down was reducing spending. This situation that had not been apparent in previous downturns.
"If we were betting, we would say that New Zealand is likely to come out of this sooner rather than later."
TURNAROUND
Year to June 30
Total income
2008 - $379.7m
2007 - $375.0m
Expenses
2008 - $352.7m
2007 - $362.3m
Net profit
2008 - $19.4m
2007 - -$7.1m
Dividend
2008 - $10.3m
2007 - nil