JSE-listed e.tv owner eMedia just took a R1.6 billion loss

Listed holding company eMedia, which includes broadcasting and publishing brands: e.tv, eNCA, OpenView HD, and YFM, on Wednesday reported an operating loss of R1.54 billion rand for the period ended March 2018, from a prior profit of R242 million.

Revenue of R2.2 billion, was lower than R2.3 billion it reported in 2017, while gross profit of R983 million, was also lower than R1.2 billion in the previous year.

The group said it ended the period with a loss for the year from continued operations of R1.6 billion compared to a profit in the prior year of R112 million.

“Included in the loss for the current year is the impairment of goodwill of R1 501 million relating to the goodwill recognised upon the acquisition of eMedia Investments Proprietary Limited. Also included in the loss is the impairment of goodwill of subsidiary Coleske Artists of R31 million and an impairment of the investment in an associate company Da Vinci Media, of R64 million,” eMedia said.

EBITDA for the group ended on R178 million compared to R405 million in the prior year, a 56% decrease year-on-year.

Headline earnings amounted to a loss of R12.5 million compared to a profit of R98 million in the prior year.

“Tough trading conditions continued for the free-to-air broadcasting industry with advertising revenue remaining flat. Despite this, the Group showed an increase of 5% in advertising revenue from R1 505 million to R1 573 million. The results were also impacted by the new Multichoice agreement with eMedia Investments. In this regard, license fee revenue was cut substantially in the current year.

In addition, the group said it continued to invest in the Openview platform which remains loss making.

“E.tv’s share of broadcast audience remains under pressure, mostly due to the popularity of local dramas commissioned by the SABC. The group has implemented various schedule changes, including the launch of an additional local drama in April 2018.

“While the SABC commissions a substantial amount of local programming, at much higher cost than equivalent international content, our ability to commission additional local drama is limited by our production budget and profitability.

“Our schedule will remain under pressure while the SABC continues to operate under a subsidised regime; however, we are confident that our current schedule should arrest any significant decline.”

Openview – inclusive of the e.tv multi-channel business – earned advertising revenue of R60 million and incurred content costs of R173 million, eMedia said.

The net operating loss of Openview amounted to R366.6 million, down from R394.5 million in 2017.

The company said that Openview set-top box activations continue to grow at an average of 35,000 per month. At the end of the period, a total of 1,149,217 (778,493 in 2017) boxes have been activated and a total of R74 million (R99 million in 2017) has been spent on retail subsidies.

The group said it will increase its content investment in the Openview platform during 2019 and recently announced that it will launch a news channel on Openview during the last quarter of 2018.

In addition, an Afrikaans block of programming, including news and current affairs, will also be launched during this time.

“While these programmes and channels will be loss making in the beginning, they are part of the content that is required to promote set-top box uptake and viewership. Openview currently attracts about 3.5% of the television audience in South Africa and breakeven is estimated to be in the region of 6%,” it said.


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