Sars, higher programming costs depress earnings but it hopes strong advertising sales and rent savings will boost revenue
The sharp drop in net profit at Television Broadcasts (TVB) last year should not cause investors to switch channels, company officials said.
The Hong Kong television heavyweight, controlled by Sir Run Run Shaw, predicts strong advertising sales and eventual savings from its new TVB City facility in Tseung Kwan O will translate into significant growth in both revenue and profit for this year.
Net profit at TVB tumbled 25.24 per cent to $440.99 million last year, far short of analysts' consensus of $510.65 million published by Thomson First Call. Turnover was up 4.72 per cent to $3.31 billion.
Operating performance was disrupted by the Sars crisis and higher programming costs. Profits were also weakened by a one-off provision of $106.38 million to cover expenditures associated with migration to a new satellite platform, DirecTV, and TVB's continuing lease obligations at its previous studio facilities in Clearwater Bay, which run to June 30 next year.
Moving to the new Tseung Kwan O TV City could help TVB to save about $100 million a year on rent, according to company secretary Ho Chan-fai. 'Given that there is no Sars this year, we should record overall growth in the high single digits,' said Mr Ho.
The Sars outbreak prompted many advertisers to cancel or postpone their advertising campaigns, lowering TVB's advertising sales last year to $1.72 billion from $1.78 billion in 2002.
