The Ten Network Holdings Limited (ASX: TEN) share price is down 7.5% today and 76% over the past year after the free-to-air television business last week posted a $232 million loss for the six-month period ending February 28, 2017.
The vast majority of the loss being a non-cash impairment charge of $214.5 million related to the value of its television license, although it still posted an EBITDA (operating income) loss of $2.4 million for the period.
The company blamed the operating loss on "weak conditions in the television advertising market", alongside increased programming and other costs.
Unfortunately for Channel 10 it seems the headwinds facing the free-to-air-TV market are only going to increase with the rise of social media and online programming such as Netflix, Apple TV and others dramatically changing the viewing habits of younger Australians in particular. Traditionally, much of Channel 10's programs have been aimed at the youth market, which means it's fighting for market share in a super-competitive area.
The only real bright spots for the business being the relative success of its KFC Big Bash Cricket and I'm a Celebrity…Get Me Out Of Here shows that helped to contribute to a 2.1% increase in revenue, with market share also edging higher.
Overall, it seems the outlook for Channel 10 remains tough, with the group carring net debt of $30.2 million as at February 28 2017 and it forecasting a full year operating earnings loss of between $25 million to $30 million.
It is therefore likely to have to rely on the largesse of its major shareholders again to keep it running, either by lending it more money or supporting another capital raising.
Channel 10 is not the only traditional media business struggling, with Nine Entertainment Co Holdings Ltd (ASX: NEC), Seven West Media Ltd (ASX: SWM) and Fairfax Media Limited (ASX: FXJ) all disappointing shareholders over recent years.
Generally this looks a space to avoid, with the Channel 10 share price travelling in the opposite direction to the likes of NASDAQ-listed Netflix over the past five years. If I wanted to invest in the media and entertainment space, I would probably look to the leading U.S. social media and entertainment companies over the struggling Australian businesses.