Cost cuts keep TVNZ $2 million in the black

Television New Zealand is "delighted and relieved" to end the financial year to June 30 without going into the red.

By saving $13 million from 88 staff cuts and scrapping shows like Wheel of Fortune and Mitre 10 Dream Home, TVNZ managed to inch into a $2.1 million profit.

But the tough times are not over yet.

Chief executive Rick Ellis says he is not planning more cuts, but an advertising slump has lingered longer than expected.

He says it will affect state TV profits in the period to June 30, 2010. Advertising revenue had continued to decline up to September but showed signs of improving in October and November.

The $2.1 million profit is down 89.2 per cent from the $19.4 million profit for the year to June 30 last year. Mr Ellis said the fall was largely due to a $17.1 million fall in advertising revenue which, TVNZ said, was down 5.4 per cent on last year.

He said that without cuts it would have been worse. "The cost cutting has done the trick for us. We had targeted $25 million savings coming into the new year and saved $13 million this year."

TVNZ spent about $3.2 million in reorganisation - nearly all of that for redundancies.

"We had hoped that the advertising market had bottomed out over the winter and that the year-on-year declines would have stabilised," Mr Ellis said.

"But our advertising revenues have continued to decline for the September quarter.

"We see encouraging signs of improvement for October and November.

"The improvement has been a quarter later than we had hoped for. That is why I am predicting growth returning to the market in the second half of 2010."

TVNZ is insisting that its new media ventures such as TVNZ.co.nz are profitable but will not specify returns.

The company will pay its Government shareholder a $1.47 million dividend compared with $10.3 million last year.

Mr Ellis said the operating environment for the financial year was "one of the most challenging in history" for advertising-reliant media.

"The company responded rapidly and well to the situation facing us, and it's only because of this prompt response that we have maintained a relatively strong position."

TVNZ reported total operating revenue of $384.8 million compared with $392.3 million and operating earnings of $10.1 million for the year.

Advertising revenue was $298.4 million, a fall of 5.4 per cent.

Debt increased from $27.7 million to $36.2 million.