Second-half softness may persist
Leaving the One.Tel disaster behind, it is evident that the core businesses of Publishing and Broadcasting Ltd had a fairly soft second half in 2000-01.
The weak advertising market clobbered the television and magazine earnings, while the lucky run of Crown Casino returned to the normal. Going forward, it appears these conditions are tending to persist, although PBL’s magazine division is looking a little brighter.
Investors wanting to see how the underlying business is performing should strip out the headline-grabbing abnormal losses and look at the core divisions in terms of EBITDA (earnings before interest, tax, depreciation and amortisation). PBL’s EBITDA was $624 million in the last financial year. That’s a decrease of 5.3 per cent on 1999-00, which doesn’t look too bad.
However, the bulk of the latest profit was earned in the first half of the financial year. The second half was considerably softer. The accompanying table tells the story.
The EBITDA for television was $253 million for the full year, but only $90 million of that was earned in the second half. The magazine division earned $94 million, of which only $40 million was delivered in the June half.
Crown generated $300 million for the year, a highly creditable rise of 10 per cent on 1999-00, but only $135 million of that occurred in the second half.
Television and magazine revenues and profits rise and fall with the economic cycle. Sooner or later they will recover, but PBL’s managing director, Mr Peter Yates, said yesterday that advertising wasn’t declining but there was no evidence of a recovery yet either, so they were hoping for better news in the December quarter.
Meanwhile, PBL is taking comfort from the thought that advertising is normally seasonal, with about 60 per cent of magazine and 55 per cent of television revenue generated in the December half.
Crown has rapidly become the jewel in the PBL empire. It now accounts for 45 per cent of PBL’s revenue and nearly half its EBITDA. But Crown was lucky in the first half of 2000-01, when it was recording wins above the theoretical rate from high rollers. In the second half, it came back to the theoretical rate. In the present half, it may do a little better than that, thanks to Christmas celebrations Togel Hongkong .
The accompanying table gives the segmental EBITDA for the full year and the second half. It also makes an estimate, based on the above numbers, of what the current half-year might look like if present trends persist. The estimated EBITDA of $320 million would mean that in calendar 2001, PBL’s results would be some 7 per cent below its 2000-01 result. Rather theoretical, but these are the sort of numbers the market factored in when it reduced PBL’s share price to recent levels of about $9.60, from $13 before the One.Tel disaster became apparent.