Southern Cross Broadcasting’s Tony Bell was a happy soul yesterday, despite having to rush his company’s results out a day earlier than planned to avoid being caught up in the release of the PBL figures. That ebullience was reflected in the early stockmarket reaction to the profit announcement, with the shares up 54 cents at one stage and finishing up 35c at $13.35 in a weaker market. Earnings were up by 16.3% to $95.7 million, from $83.3 million a year ago.

Why so strong when earnings before interest and tax from the key TV business – the company operates NWS 9 in Adelaide and is a major affiliate for the Ten Network in regional Australia – rose just 1.9% or $1.3 million to $71 million?

Well, the takeover of major production house Southern Star, with its myriad profitable production deals with local and foreign networks, saw a contribution of $10.9 million in the year to June. And that boosted the slow but solid earnings from TV and the 14.3% growth in earnings from radio to $15.4 million.

Without Southern Star’s contribution the earnings increase would have been more modest, less than $2 million. But the most interesting move was to write down by $12.4 million the value of the movie and mini-series held within the inventory of NWS 9, the Southern Cross affiliate of the Nine Network which is based in Adelaide – due to “changing viewing habits, movies and mini series will, in future, have less prominence within the free to air viewing line-up and are in general less likely to be repeated.”

Hence the write-down in a one-time provision, in line with the policy from PBL. The company said the move “will reduce the operating costs of Channel Nine Adelaide over the next five to six years as it will reduce future amortisation of program inventory” (unless viewing habits continue to change dramatically and DVD and video on demand drive greater holes through viewing patterns).

But the most interesting move was the $2 million write down in “the recoverability of the Commonwealth Games rights cost,” which shows the Commonwealth Games set down for Melbourne next March will be a financial disaster for Nine, as many have suspected.