It’s no
wonder Sam Chisholm has wielded a very big and bloody axe at the Nine Network’s
stations in Sydney, Melbourne and Brisbane. The PBL
annual profit statement reveals the damage done from a blow out in costs and a
slow down in advertising income in the last six months of the year to
June.

Sam’s
end of financial year clean out at Nine in the last week of June, cost $27.9
million before tax, with $3.5 million of that relating to the cost of the clean
out at head office in Willoughby, especially the management dominated third
floor. In
addition the Network has slashed the value of its program inventory,
particularly TV movies and series by $113.7 million. This also included an
unspecified amount write-down in the cost of the Commonwealth
Games.

Second
half costs jumped 10% or more than $29 million, while revenue growth eased in
the second half to only one per cent, or just $5.7 million. Revenue over the
year only grew by $42.1 million (up 4.8%) while costs jumped 8.8% or $51.1
million. Second
half earnings before interest tax and depreciation of $98.8 million, compared to
more than $138 million in the last half of 2004.

It was
that decline that led to the rising pressure on David Gyngell. He quit before he could be pushed and that in turn
brought Sam Chisholm in to wield the axe, which he has done, brutally but
effectively. Costs
for the group overall rose 21.1% (even the tightly managed magazines saw a rise
in costs in the second half, linked to the launch of two new magzines and the revamp of The Australian Women’s Weekly,
which continues into this half).

Revenues (‘normalised’) to
take account of win rates in the gaming operations at Crown and Burswood In Perth, rose by 20.6%, much of that came from the 10 months contribution from Burswood, which was acquired during the
year.

Overall
Nine reported a 3.6% decline in earnings before
interest tax and depreciation and amortisation to $270
million ($280.1million) with the company’s gross profit margin plunging from
more than 35% in the first half to 23% in the second half.

That
was about part on where the rival, Seven Network was heading in its second half,
but earnings jumped 19%.