TVNZ says factors responsible for its financial performance are not likely to improve in the near future.
TVNZ has reported a $24.5 million profit for the six months ended last December, but although the improvement was praised in the report tabled in Parliament yesterday, the books show TVNZ's costs are risingfaster than its revenue.
The report did not mention that the higher profit was in part due to the previous year's $5.9 million payout to axed newsreader John Hawkesby and a $6.8 million write-off of costs associated with dumped plans to move to digital broadcasting. To the same time in 1999, the company's profit was $21.6 million.
Revenue in the latest half-year was up from $250 million to $261 million, and expenditure rose from $201 million to $224 million. This represents a decline in the operating surplus (before tax and one-off items) from $49 million to $37 million.
The state-owned enterprise said it spent a further $30.5 million on "telecommunication distribution infrastructure assets to provide for the expansion of the group's transmission activities." This spending was included in the accounts as an intangible asset.
TVNZ was also proposing to pay the Government a dividend of $17.1 million.
The report said difficult market conditions and pressures on the New Zealand economy, resulted in reduced advertising revenue and dearer programmes bought overseas.
"Although the company's advertising revenue fell during the period, group revenue grew by $10.6 million due to the outstanding performance of overseas earnings from TVNZ Australia and TVNZ Satellite Services."
The soft advertising market will continue this year.
Increased costs came from depreciation, the Olympic Games, a website set-up, and a new staff superannuation scheme.
The report said TVNZ had been costing the implications on its performance of a proposed charter and "believes these options can now be discussed in a framework of fiscal and commercial reality."
