A decrease in advertising revenue at eMedia Holdings has resulted in a R2bn impairment, which drove down its full-year earnings, the television operator said on Friday. 

The company said the impact of the impairment was expected by the loss of advertising from some key industries, such as fast foods, alcohol and the motor industry, as well as the negative impact on the exchange rate.

With a 6.4% gain in revenues to R2.506bn for the year to March 2020, the group ended the period with a loss for the year from continuing operations of R1.804bn. 

Without the impairment, the group said adjusted profit from continuing operations was R235.7m. 

One of the main contributors to the increased profit was the rise in market share, said eMedia. The e.tv share in prime-time has remained consistent during the financial year, driven by the performances of local daily drama series such as Imbewu: The Seed, Scandal and Rhythm City.

Management will be introducing a new local daily show in the new financial year, said the operator. 

Earnings before interest, tax, depreciation and amortisation (ebitda) rose 35% increase year on year to R436.6m compared to R323.4m previously.

eMedia reported a huge 4,025.7% drop in earnings per share from 10.85c in 2019 to a loss of 425.94c per share.  Headline earnings per share rose 147.9% to 33.34c from 13.45c per share in the previous year. 

Broadcasters are generally battling to grow profits because many companies have reduced advertising spend.

The most-watched 24-hour news channel in SA, eNCA, has struggled financially in recent years. In previous financial results, eMedia, which owns eTV, eNCA and Open View, acknowledged that reduced spending by MultiChoice had forced it to embark on a cost-cutting programme as licence fee revenue was cut substantially. 

“While advertising revenue remains under pressure, costs are being well maintained in light of the reduced DStv contract that is in its third year now,” said the company.

Now Covid-19 has added further pressure to that revenue stream. 

Despite the loss position, the group has declared a dividend of 11c per share, which it says will be paid out of income reserves. 

In late afternoon trade on Friday, shares in eMedia were trading 7.89% higher at R4.10, giving the company a R2.51bn market capitalisation.