GSN runs $3m loss for 2004

[CaseyAbell]

Nine months into 2004 it looked like GSN was going to turn its first yearly profit. Too bad, but the network wound up slightly in the red for 2004, with a net operating loss of $3 million on record revenues of $88 million. Still, the network's financial performance has definitely improved from the grim numbers of several years ago:

2001: $17m loss on $37m revenue
2002: $12m loss on $53m revenue
2003: $1m loss on $76m revenue
2004: $3m loss on $88m revenue

Has to be a disappointment to keep increasing revenue but never quite escape from the red ink. The network increased its revenue 15.8% in 2004 but its expenses rose 17.9%, which kept GSN from its first black year. Maybe GSN is really trying to control expenses now, which could account for the network's rather barren development slate and the return to older (and cheaper) shows.

All the numbers are in Liberty's 10-K. Perhaps the most interesting (or ominous) news is that GSN is out of contract with DirectTV:

"GSN is currently out of contract with an affiliate that accounts for approximately 24% of GSN's current subscriber base, and is in negotiations for the renewal of such contract. For the year ended December 31, 2004, GSN earned 11% of its total revenue from DirectTV."

Hm, looks like the first priority is to get that contract renewed.

EDIT: Corporate half-sibling Court TV probably won't be a half-sibling much longer. Time Warner has a call on the network they can exercise in 2006. Court TV has become very profitable, and according to a story in MultiChannel, Liberty execs expect Time Warner will call the network away.

[Jimmy Owen]

I get the impression that it's all about exit strategies for Liberty.  Infuse some cash, get somebody interested in buying their share, get back more cash than they put in.

[CaseyAbell]

I don't know that Liberty is interested in selling. A stock analyst insisted a while back that Liberty is "just enamored" of the network.

GSN has really done the job on the top line. They've increased revenues by almost two-and-a-half times since 2001. It's hard to get away from a property that has grown revenue like that.

But maybe some tighter expense controls have gone into effect. GSN is switching to a lot of older material that comes cheap, and seems to have cut back on development efforts. The only new shows in the pipeline look to be the pool show and the anything-to-win documentary, and they both sound like penny-pinchers.

Maybe some new eps of the poker and blackjack shows will come along, too. Even the Prof's dream of a new Lingo season may materialize. But it will probably be a while before GSN lavishes anything like the dollars it spent on the horseracing show.

EDIT: Another corporate half-sibling may be going bye-bye. Liberty is spinning off its interest in Discovery networks into a separate publicly traded company. Some analysts think that's a precursor to a complete sale of the property.

So maybe Liberty is planning to liquidate all its holdings. An analyst quoted by MultiChannel says: "Moreover, it appears that a liquidation of Liberty as we know it today is being executed over a protracted period, which will continue to enhance shareholder returns."

GSN is the tiniest drop in Liberty's bucket. But maybe a sale is in the works eventually. The network does have "uniqueness" value because of the lack of competition in its niche. The question is how much potential buyers would value the niche to begin with.

[WhammyPower]

Oh, good, maybe I can finally get away from that PoS network....

[xibit777]

I kind of believe that the increase in expenses was due to the change over to GSN.  They did a lot of advertising for it, along with leasing tons and tons of shows (although bad ones that would get canceled after 3-4 months)

What they need to do is stop leasing the terrible shows and go with a few solid shows that will last a while.   Looks like they've already started this.  I haven't seen a single bad lease come in 2005 so far.   The only disaster so far this year was American Dream Derby.  But I hope they've finally learned... STOP THE REALITY crap.  It just doesn't work here.

The whole contract expiration with DirectTV is scary.  If they can't negotiate a renewal, the network is going to be in huge trouble.   Hopefully it's not difficult to do.

[Gromit]

So revenues more than doubled in a short two years, yet expenses outpaced that? Scary.

Where the hell is all the money going? Fundamentally, what's so expensive about running the network now, vs a couple of years ago?

[Dbacksfan12]

[quote name=\'Gromit\' date=\'Mar 18 2005, 01:42 AM\']So revenues more than doubled in a short two years, yet expenses outpaced that? Scary.

Where the hell is all the money going? Fundamentally, what's so expensive about running the network now, vs a couple of years ago?

[snapback]78548[/snapback]

[/quote]
Probably the large increase in original programming....some of those shows ain't cheap to shoot.

[uncamark]

[quote name=\'Modor\' date=\'Mar 18 2005, 02:27 AM\'][quote name=\'Gromit\' date=\'Mar 18 2005, 01:42 AM\']So revenues more than doubled in a short two years, yet expenses outpaced that? Scary.

Where the hell is all the money going? Fundamentally, what's so expensive about running the network now, vs a couple of years ago?

[snapback]78548[/snapback]

[/quote]
Probably the large increase in original programming....some of those shows ain't cheap to shoot.

[snapback]78552[/snapback]

[/quote]

Even if they look cheap.  

[Sonic Whammy]

Well, whether the shows look cheap or not, we have to consider that yes, they HAVE cost a lot, especially in terms of what they've given away.

> American Dream Derby gave away that horse stable estimated at around $250,000. Plus the idea of doing that finale live, which is something they haven't done since the days of Trivia Track and Super Decades...

> Poker Royale's money in January may not have come from GSN, but the promotions talked about someone online winning $5 million along with the tournament's winner. I'm curious if someone actually won it. (If anyone can clue me in on that one)

> Perhaps the biggest increase in the budget comes from the growing interactive element of the network. This is especially true now with more prizes offered to players for the more they play and/or win. Even if the prizes might be chinsy (unless someone has firsthand experience otherwise), the more people play, the more they give away.

I might be off base here, but it does sound like it can add up.

[zachhoran]

[quote name=\'Sonic Whammy\' date=\'Mar 26 2005, 07:06 PM\']

> Poker Royale's money in January may not have come from GSN, but the promotions talked about someone online winning $5 million along with the tournament's winner.

[snapback]79536[/snapback]

[/quote]

The $5 Million dollars was not won. The home player won $15K IIRC plus a supply of Pizza Hut Full House pizza.

[Jimmy Owen]

[quote name=\'zachhoran\' date=\'Mar 26 2005, 07:29 PM\'][quote name=\'Sonic Whammy\' date=\'Mar 26 2005, 07:06 PM\']

> Poker Royale's money in January may not have come from GSN, but the promotions talked about someone online winning $5 million along with the tournament's winner.

[snapback]79536[/snapback]

[/quote]

The $5 Million dollars was not won. The home player won $15K IIRC plus a supply of Pizza Hut Full House pizza.

[snapback]79538[/snapback]

[/quote]


With or without the gratuity?