E.tv parent swings deep into the red with R1.6bn loss

eMedia Holdings, which indirectly owns e.tv, OpenView HD and 24-hour news channel eNCA, has report a R1.6bn loss for the 2018 financial year, from a profit in 2017 of R160m. Revenue fell from R2.3bn to R2.2bn.

Included in the loss is the impairment of goodwill of R1.5bn related to the acquisition of eMedia Investments. Also included in the loss is the impairment of goodwill of subsidiary Coleske Artists of R31m and an investment in an associate company, Da Vinci Media, of R64m.

Earnings before interest, tax, depreciation and amortisation — a measure of operational profitability — came in it R178m, compared to R405m previously, a 56% decrease year on year. Headline earnings were a negative R12.5m compared to a profit of R98m in 2017.

The only asset of the group is a 67.7% interest in eMedia Investments, the company that owns e.tv, eNCA and OpenView HD.

“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,” it said in commentary to investors. Ad sales amounted to just under R1.6bn.

The company also blamed the poor results on a new agreement between eMedia Investments and MultiChoice — related to the supply of the eNCA channel to DStv — where licence fee revenue was “cut substantially”. It also continued to invest in OpenView, 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,” eMedia added. To address this, it 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,” it said. “However, we are confident that our current schedule should arrest any significant decline.”

A reduction in movie slots and a detailed analysis of its movie inventory led to a once-off write-down of R68.8m.

OpenView HD

Turning to OpenView, which offers free-to-air programming via satellite, eMedia Holdings said the business earned ad revenue of R60m but incurred content costs of R173m. Operating costs, including retail subsidies of R74m — presumably for set-top boxes — came to R255m. This led to a net operating loss at OpenView of R366.6m, compared to R394.5m a year ago.

OpenView set-top box activations continue to grow at an average of 35 000/month. At the end of March, more than 1.1m boxes had been activated. eMedia said it remains committed to the platform and will increase its investment in content in the 2019 financial year, including a new 24-hour news channel that will go live in late 2018. It said OpenView attracts 3.5% of the television audience in South Africa, with breakeven likely at 6%.  — © 2018 NewsCentral Media