Network Ten’s victory on Monday in the Federal Court in its defence of defamation action taken against it and its star Lisa Wilkinson by former Liberal staffer turned rapist Bruce Lehrmann was spectacular.
But judge Michael Lee delivered a judgment that has so far cost the Paramount Global-owned Australian TV network many millions of dollars in legal fees that the No.3 free-to-air broadcaster can ill-afford – and may never get back.
A pending order by Lee as to who will pay parties’ legal costs in the mega case may ultimately see little flow to Ten from Lehrmann, who could be declared bankrupt if Ten and Wilkinson pursue him for costs Lee orders but that Lehrmann can’t pay.
Confidential, unaudited accounts seen by Margin Call reveal the extent to which the financial performance of Ten, which has been in the hands of the listed US media giant since late 2017, is in decline.
Documents, which Ten was shocked to discover had been obtained and was ill-prepared to discuss, reveal that profit in Australia has plummeted, revenue is in decline and television costs are on the rise at the network under the leadership of Beverley McGarvey.
Ten accounts for its operations are based on a calendar year. For the 12 months to December 31, 2022, the network suffered an almost eight-fold drop in bottom line earnings to $42.2m, from $324.3m the year before.
A Ten spokesman, who stressed the numbers were unaudited, said Ten’s 2021 result had been boosted by $163m in reversals of previous writedowns as well as other one-offs. But even before these adjustments, the drop in net earnings was significant.
Historically, Ten has liked to focus on underlying earnings, the group’s result before special or one-off items have been taken into account. But that number also fell by about 25 per cent in the 2022 year to $77m, from $104m – a drop of 26 per cent.
Revenue was also down on the previous year, from $696m to $675m, which the network said was “due to contraction in the overall advertising market after the Covid rebound boost in 2021”.
Despite the fall in revenue, television costs were up in the period, from $565m to $614m, which Ten put down to “once-off cost reductions in 2021 including the release of onerous contracts costs of $32m and depreciation of $12m”. The network said its underlying costs rose a lesser 5 per cent in 2022, which was “due to increased investment in programming and content”.
There has been an almost three-time increase in trade and other current payables to more than $160m, at the same time as a tenfold increase in cash held to just under $70m.
A spokesperson said there had been “no change in the payment profile to vendors” and that the cash balance remained “healthy at $70m to pay commitments as they fall due”.
“There has been no changes or slow down to the payment of bills,” the spokesperson said.
Behind the scenes, Ten is stressing that it remains a profitable company, but acknowledges that audiences have changed their TV viewing habits.
This has driven Ten to change its business model to meet audiences on the platforms and channels they prefer.
Towards reducing costs, Ten has recently announced a program of redundancies as part of that which is taking place at its global parent. Jarrod Villani, who was running things in Oz and New Zealand for Ten alongside McGarvey and was previously the administrator of Ten when it fell into administration in mid-2017, was in February shown the door.
All the while parent Paramount Global is in talks for a potential merger with Skydance Media, within which the future of the Aussie outpost is unknown.
Ten’s win against Lehrmann might have been a feel-good moment for the network, but it may be short-lived as the financial screws are tightened.
Shuffling deck chairs
The professional reputation of Ten’s in-house legal counsel Tasha Smithies, who advised Lisa Wilkinson on her Logies speech that delayed Bruce Lehrmann’s ultimately aborted criminal rape trial in the ACT, was smashed by judge Michael Lee in court on Monday.
But her role at the network is not the only one on the minds of Ten’s US masters, who are getting on with the business of reshuffling the deck chairs amid its redundancy program.
Now that Jarrod Villani has left, there has been an empty seat at the Ten Network Holdings board table, which has just been filled by newly elevated finance executive Natasha Coxhead.
She sits on the board alongside her boss Beverley McGarvey, but there is no longer any Paramount representative director after the exit of Paramount’s London-based president of broadcast and studios international, Maria Kyriacou.
She left a day after the global redundancies were announced in January and was quickly also removed from the Aussie company.
New York clearly has other things on its mind.
ABC board opening
Communications Minister Michelle Rowland is gearing up to further put her government’s stamp on oversight of the ABC, with her department calling for applications to sit on the boards of the national broadcaster and SBS.
Following the appointment in January of former Foxtel and News Corp executive Kim Williams as ABC chair, shortly there will be a fresh seat to fill pending the end of ex-Seven finance exec Peter Lewis’s second five-year stint as a part-time ABC director in October.
The independent nominations committee, chaired by retired senior public servant Helen Williams, wants applications from potential non-exec directors by May 6, with their shortlist then going to Rowland for her selection. Along with Williams, the new ABC recruit will join other directors who include long-time media executive Peter Tonagh and staff-elected board member and political journalist Laura Tingle.
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