eMedia Holdings, the company that owns e.tv, eNCA and Openview, on Thursday reported results for the year ended March 2019 showing a slight uptick in revenue from continuing operations of R2.4 billion, from R2.3 billion before.
The group reported an operating profit of R183 million, from a prior loss of R1.5 billion in 2018. Headline earnings per share improved to 13.45 cents, from a prior loss of 2.81 cents per share.
Included in the loss for the prior year is the impairment of goodwill of R1.5 billion relating to the goodwill recognised upon the acquisition of eMedia Investments Proprietary Limited in the year ended 31 March 2014.
Also included in the prior year 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. If these impairments were excluded, the group would have shown a profit of R11 million in the prior year, eMedia Investments said.
EBITDA for the group ended on R321.3 million compared to R231.2 million in the prior year, a 39% increase year-on-year. Headline earnings for the group amounted to a profit of R59.7 million compared to a loss of R12.5 million in the prior year.
The only asset of the group is a 67.69% interest in eMedia Investments, the company that owns e.tv, eNCA and Openview.
Tough trading conditions continued for the free-to-air broadcasting industry with advertising revenue under increased pressure, eMedia said. Despite this, the group showed an increase of 4% in advertising revenue from R1.573 billion to R1.638 billion. This was in some way assisted by the increase in market share of the group from 18.1% in March 2018 to 24.1% in March 2019.
Cost of sales, which mainly consists of the cost of content in the case of e.tv and employee costs in the case of eNCA increased by 1% from R1.199 billion to R1.211 billion. Administrative and other expenses have been well maintained and showed a slight decrease of 0.9% year-on-year.
“While the group continues to invest in the Openview platform which remains loss making, the above factors contributed to the turnaround in profits,” eMedia said.
The e.tv share in prime-time increased from 15% in March 2018 to 19.2% in March 2019. This was driven by the introduction of Imbewu: The Seed at 21:30 and improved performances from local dailies Scandal and Rhythm City, the group said.
Openview earned advertising revenue of R131.8 million and incurred content costs of R255.7 million up from R173.6 million the previous year. “The increase is attributable to the launch of Open News as well as the addition of an Afrikaans block on eExtra and the launch of eReality in November,” eMedia said.
These content changes have increased the market share on other eChannels from 2.6% in March 2018 to 4.6% in March 2019. Operating costs, including retail subsidies of R55.3 million amounted to R185.4 million compared to R193.6 million in the prior year.
The reduction, eMedia said, is mainly due to the reduction in subsidy from R150 to R75 per box in October as well as the exit from the SES contract.
Openview set-top box activations however, continue to grow at an average of 35,000 per month, eMedia said. At the end of the period, a total of 1 574 395 (2018: 1 149 217) boxes have been activated and a total of R55.3 million (2018: R74.5 million) has been spent on retail subsidies.
The financial year also saw the launch of PVR functionality for the Openview box and the new financial year will see the launch of a few more technical initiatives in Platco, the group said.
“Despite eNCA only being on some of the premium DStv bouquets while SABC News is on all the bouquets and the DTT platform, eNCA continues to be the most watched 24-hour news channel in the country with 45% of the market share. While advertising revenue remains under pressure, costs are being well maintained in light of the reduced DStv contract that is in its second year,” it said.
Looking ahead, eMedia said that the television market is facing numerous technology and viewership challenges which will require the group to continually assess its strategic alternatives.
“Our investment in Openview provides the group with strategic flexibility and is part of our plan to address the challenges of the impending digital migration transition. We continue to engage government on its DTT and DTH plans.
“With the sale and our closure of certain non-core assets during the year, the group is focused on its core businesses of broadcasting, content creation and a platform and technology provider.”