Doughty Hanson takes writedown of €54m on investment in TV3
PRIVATE EQUITY investment group Doughty Hanson took a writedown of €54 million on its investment in Irish commercial broadcaster TV3 at the end of last year.
In a statement on its 2008 financial results published by TV3 yesterday, the Ballymount-based company said this reflected “the impact of the recession on the value of goodwill” in the station at the end of 2008.
Doughty Hanson acquired TV3 for €265 million in 2006. This included an equity investment of €140 million with the debt finance supplied by Anglo Irish Bank.
TV3’s operating profit halved last year to €10 million due to a sharp increase in the cost of programming, while its revenues were flat at €62 million.
A decline in advertising sales was offset by increased revenues from sponsorship and online activities.
The station said its operating costs increased to €52 million, a rise of €10 million on 2007.
“This [rise] was largely from programming,” TV3 chief executive David McRedmond said.
“We signed new sports contracts and it was the first full year of the [extension to the] Granada contract.”
TV3 last year signed contracts to show live Uefa Champions League and Europa League soccer. It also broadcasts All Ireland GAA matches.
Its contract with Granada allows it to broadcast programmes such as Coronation Street and X Factor.
TV3 increased its home production by more than 50 per cent to 1,900 hours of programming last year. This includes The Apprentice, the Bill Cullen-fronted reality show currently in its second season.
TV3 reported a net loss of €400,000 for the 12 months to the end of last December after a €10 million contribution was made to Doughty Hanson for bank interest and tax charges.
TV3 said €5 million of capital was repaid on its debt last year while the group also rescheduled its bank funding arrangements.
Commenting on the station’s financial performance in 2009, Mr McRedmond said its revenues would be “slightly below” last year’s figure and the company would “show an operating profit”.
He said revenue was “sharply down” in the first half of this year but had recovered since August.
“The real issue now is when are we going to come out of recession,” he said. “We are starting to see some signs of that, but it’s slow.”
In a bid to trim costs, TV3 initiated a “recession plan” in the final quarter of 2008, a move that reduced its like-for-like costs by 15 per cent.
This involved two rounds of redundancies, with its headcount reducing by 30. The station now employs 200 staff.
Last year TV3 acquired Irish digital station Channel 6, which has since been relaunched as 3e, and invested almost €1 million in a new online portal.
“Last month online turned a profit,” Mr McRedmond said.
He said 3e was also close to entering the black. “We hope it will hit a profitable run rate quite soon.”
TV3 said it was now the most viewed channel for 15- to 24-year-olds here.