Ten Network making news

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Newly appointed chief executive Hamish McLennan will be put under the spotlight today, as he faces investors of Ten Network Holdings (TEN.AX) to deliver the station’s first-half results.

Having only come into office last month, McLennan is expected to announce a net loss after tax of around $18 million, with earnings before interest, tax, depreciation and amortization (EBITDA) around $6 million, according to research by Bloomberg.

It has been a sad story for Ten Network’s investors for a number of years. At today’s price of $0.30, longer-term shareholders have recognised a loss of 84%, with shares having fallen from $1.89 in April 2010 to a dismal low of $0.235 in December last year.

Whilst McLennan will attempt to convince the market that the company can, indeed, turnaround from its current position, there will be “no quick fix” to the problems it faces, according to analyst Jarrod McDonald.

One of Ten’s largest problems is its ever-increasing debt profile. Whilst a capital raising was intended to put the company in a net-cash position of $45 million, some analysts now expect they will have a net debt of $51 million by August, according to The Australian Financial Review. This debt limits the network’s capacity to purchase rights to new programs, which it needs to attract viewers and advertisers.

Despite these limitations, the company contested Seven West Media’s (SWM.AX) and the Nine Network’s bid to acquire a five-year media rights deal with Cricket Australia – a bid which is believed to have been worth around $350 million.

Foolish takeaway

Whilst shareholders were happy to see McLennan take over the reins at Ten, the company still faces turbulent times. Furthermore, due to rapidly declining ratings and revenues, a new affiliation deal with Southern Cross Media (SXL.AX) has yet to be agreed upon.

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