TVNZ has claimed its programming output deal with Disney is a key factor behind a whopping 89% drop in full-year profits.
The New Zealand broadcaster reported that its deal with Disney was now “loss making”, and has booked a NZ$12.4 million (US$8.9 million) provision for the full year to recognise further forecasted losses.
Traditional US studio output deals have increasingly come under the spotlight, with many buyers and channels claiming they no longer offer good value for money.
In Australia, Network Ten’s deals with Fox and CBS were among the reasons given for the commercial broadcaster going into administration earlier this year. This week, it emerged CBS had converted debts owed to it as part of a deal to become Ten’s new parent.
Elsewhere, Nine Network ended its deal with Warner Bros. last year, claiming it would allow for “increased flexibility in relation to future content spend”.
TVNZ CEO today Kevin Kenrick (pictured) said 2017 had been “a year of big challenges, big projects and a few tough decisions”.
He pointed to grow in peak linear audience share and VOD service TVNZ OnDemand “delivering double-digit growth” in reach as successes.
“The other big focus for the year has been the significant steps taken to create a more sustainable future including redesigning the organisation structure, renegotiating core content agreements, and writing off unsustainable content and accommodation lease commitments,” added Kenrick.
“These actions will enable the business to confidently increase future year investments to accelerate digital growth.”
TVNZ chairman Therese Walsh said that, excluding the Disney contract costs, financial outcomes were “in line” with expectations.
Revenue declined 2.5% year-on-year and was NZ$316.5 million, while after-tax full-year profit fell nearly 90% from NZ$11.3 million a year ago to NZ$1.4 million.
TVNZ earlier this year saw Cate Slater replace Jeff Latch as director of content.
The broadcaster is currently subject to speculation that the New Zealand government will remove advertising from the commercially funded, public broadcaster.