KEY POINTS:
State-owned broadcaster TVNZ briefed staff today on a plan to cut costs by $25 million by June 30.
At this stage there is no figure for job losses but they are expected to eventuate from such a large cost saving target. TVNZ employs about 1500 people, with the
majority based in Auckland, according to its website.
Fifty senior managers have been asked to come up with ways of saving money.
The cost cutting plan is a result of a collapse in the advertising market since Christmas.
"At yesterday's TVNZ leaders forum, which the executive team and I host twice a year, I shared with the 80 or so leaders in attendance that our revenue and profit projections for the financial year ending June 30, 2009 and for the calendar year of 2009 had deteriorated rapidly since January," chief executive Rick Ellis said in a note to staff.
TVNZ said advertising revenues are 10 per cent below budget, which represents an annualised shortfall of income of $30m.
The half-year result due at the end of this month will be "pleasing" but reflective of trading to December 31.
Ellis said there has been a "fundamental change in market behaviour and willingness to spend on advertising" as a result of the global economic recession.
"We have no choice but to reduce our budgets by about $25m in the next few months to compensate in order to avoid a financial loss while we continue with our strategy of inspiring New Zealanders on every screen," said Ellis said.
TVNZ did not comment on likely cost cutting strategies. Fisher & Paykel this week announced a 5 per cent cut in pay for executives and asked salaried staff to take a rostered day off a month. Its chief executive is taking a 7.5 per cent pay cut on a $1.1m salary.
The broadcaster also did not comment on whether its dividend to the Crown would be reduced.
In the year to June 30, 2008 the broadcaster paid the Crown a dividend of $10.3m after reporting an after-tax profit of $19.4m.
Excluding government funding for the digital channels, total income for the year to June 30, 2008 was $379.7m. Excluding costs for the digital channels which are covered by government funding, total expenses were $352.6m.
Other media companies were expected to report a drop in advertising revenue this reporting season. Fairfax and APN News & Media both report next week.
Sky Network Television today reported its profit dropped 16.7 per cent in the six months to the end of December.
This was mainly a result of investment in the new High Definition (HD) platform and the impact of the recession on its free-to-air Prime channel's advertising revenue - which decreased 11.9 per cent to $12.6m.
- NZPA