TVNZ Profit Plunges with “Onerous” Disney Content Deal

TVNZ has posted an 89 percent drop in its full-year profit, pointing to its output deal with Disney as a key factor in the decline.

The state-owned broadcaster reported EBITDAF of NZ$17.4 million ($12.5 million), citing an “onerous contract provision” and marginal year-on-year declines in ad revenue. TVNZ’s content output agreement with Disney has become “loss making” and it has booked a NZ$12.4 million ($8.9 million) provision in full-year 2017 to recognize the forecasted future losses of this contract.

Revenue declined 2.5 percent, with market declines in TV advertising partially offset by TVNZ growing its share of the TV advertising market and increasing online revenue growth.

TVNZ Chief Executive Kevin Kenrick commented: “It’s been a year of big challenges, big projects and a few tough decisions.

“TVNZ exceeded its goal of engaging 2 million New Zealanders per day with peak audience TV share reaching a multiyear high and TVNZ OnDemand delivering double-digit growth in audience reach. Other highlights include TVNZ.co.nz upgrades to bring together live streamed TV channels and OnDemand viewing, a refresh of TVNZ branding, and the 25-year anniversary of New Zealand’s most watched local entertainment series, Shortland Street.

“The other big focus for the year has been the significant steps taken to create a more sustainable future, including redesigning the organization structure, renegotiating core content agreements, and writing off unsustainable content and accommodation lease commitments,” Kenrick continued. “These actions will enable the business to confidently increase future year investments to accelerate digital growth.”