TVNZ boss expects smaller full year loss after strong six months

Friday, 28 February 2020

The Dead Lands is now streaming on TVNZ OnDemand.

TVNZ says growth in both television and online advertising boosted revenue, and profits, in the six months to the end of December.

Total revenue was up 3 per cent, or $5.5 million, to $179m, the state-owned broadcaster said, but it warned the economic impact of coronavirus could result in a softening of advertising in the coming months.

Late last year TVNZ said it expected to make a $17m deficit for the full year to the end of June 2020, but chief executive Kevin Kenrick said the strong start to the financial year meant the deficit was now expected to be smaller.

TVNZ chief executive Kevin Kenrick photographed at the Auckland TVNZ studios.

'From our perspective, it's been a really good start to the year,' Kenrick said.

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'We expect that there will be a deficit for the full year, but given how well we've started, probably not as big as we forecast a year ago.'

It would be naive not to expect an impact from coronavirus however, he said.

'The biggest challenge will be businesses facing cash flow challenges looking to cut costs in order to maintain the viability of their businesses,' he said.

That could mean some cut their advertising spending.

There's never a shortage of drama at Shortland Street.

Key drivers of TVNZ's six-month performance included strengthened share of TV advertising, continued online growth, and the positive impact of Rugby World Cup during the period, it said.

Operational expenses of $152.8m were up $5.1m compared to last year, which it said was a result of investments in technology and local programming.

Oriini Kaipara hosts 1 News and Te Karere at TVNZ.

Kenrick said the results were an encouraging start to the 2020 financial year with a net profit of $15.8m, up $5m year on year, equating to a rise of 47 per cent.

'Strong ratings performance for our primetime daily news programmes and live sport enabled TVNZ to grow share of audiences and advertising revenue for the half year,' he said.

'Close to 3 million New Zealanders tuned in to watch Rugby World Cup games on TVNZ 1 and DUKE. TVNZ has subsequently secured additional sports rights in partnership with Sky (Tokyo 2020 Olympic Games) and Spark Sport (NZ Cricket) to complement existing Tokyo 2020 Paralympic Games and America's Cup content rights.'

He said TVNZ OnDemand had performed extremely well, with ongoing growth in total video streams and audience reach propelling online revenue growth of 26 per cent year-on-year.

'Viewer experience has been enhanced with the launch of individual profiles, and the new 'ad on pause' functionality has increased value for advertisers.

'TVNZ is keeping pace with global scale online streaming competitors, illustrated by Horizon Research recognising TVNZ OnDemand as New Zealand's most used online content service during 2019, ahead of Netflix,' he said.

'The thing that is obvious to us is the need to focus more and more around our local content because our competitors are primarily the global players,' Kenrick said.

International programming had been a big early driver of TVNZ OnDemand, he said, but local content was now powering growth.

In order to free up cash to invest in local programming, the TVNZ board struck a deal with the Government last year to suspend dividend payments for three years.

'Local content is more expensive than buying international rights. That has been the biggest challenge in the transformation,' Kenrick said.

That produced an angry backlash from rival MediaWorks, which said the state-owned broadcaster was being allowed to compete on 'non-commercial' terms.

The future of TVNZ in its current form is up in the air with the Government planning to forge ahead with a plan to create a new, super-sized public broadcaster by merging Radio New Zealand and TVNZ.

Kenrick had no special insight into how those plans will work out, but would not rule out making a tilt at running the super broadcaster, should it emerge.