Prime Media swings to $93.5m loss after write-offs

The challenges facing regional TV have prompted Prime to announce write-offs that have plunged it into the red.

Prime chief executive Ian Audsley.

Regional TV broadcaster Prime Media has swung to a loss in the full year, weighed down by impairments worth over $100 million.

For the 12 months to June 30, Prime (PRT) delivered a loss of $93.5m, a sharp fall from last year’s $35.5m profit.

The red figure was driven by previously unannounced write-offs worth $122.9m relating to both the value of its TV licenses and goodwill.

“The structural challenges facing regional television have compelled the board to review and adjust downward the carry value of television licences and goodwill, resulting in a one-off, non-cash impairment of $122.9 million,” Prime chief executive Ian Audsley said.

“This adjustment reflects the impact of new and largely unregulated market entrants, increased competition for audiences from global and Australian media platforms, and the comprehensive reach of the internet and streaming services.”

Mr Audsley said the impairments would not impact its banking covenants, adding Prime was the last broadcaster to write down the value of its licenses.

After stripping out the impact of significant items, however, the group delivered an underlying profit of $27.3m, down 18.3 per cent on last year but ahead of guidance for core profit in a range of $23-$24.5m.

The outstripping of expectations came after the company warned of a weak advertising market in April, with its revenue for the full year ending down 7.7 per cent to $238.8m as a result.

“We are pleased to have outperformed guidance provided to the market in April this year, particularly given the established difficulties in the regional television advertising market, which were further compounded by the uncertainty of network affiliation changes for our two main competitors,” Mr Audsley said.

“It was also encouraging to have once again increased our share of audience and share of revenue.”

Prime was wary on the outlook given ongoing “pressure” on the regional broadcasting sector, cautioning a lift in revenue tied to the AFL finals and Olympics may not continue into the remainder of the fiscal year.

“The Rio Olympic Games broadcast will deliver Prime a much improved revenue outcome compared to July and August 2015. Combined with the AFL Finals series in September, we expect first quarter advertising revenue to show strong improvement on the prior corresponding period,” Mr Audsley said.

“(However), due to limited visibility in the second quarter Prime cannot provide an earnings forecast for the first half of the 2017 financial year.”

Prime delivered a fully franked final dividend of 1.7c a share, in line with last year. Its full year payout of 3.7c a share was also the same as fiscal 2015.