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Ten Network Holdings Limited - Licence fee rebates to lift earnings

The decision of the Australian government to rebate licence fees payable by television stations this year and next effectively reduces the operating expenses of Ten Network Holdings (TEN) with a resulting increase in forecast earnings. While the announcement from the Minister (Senator Conroy) based the decision on protecting the amount spent by commercial television on Australian content, there appears to be no formal requirement on TEN or other TV stations to increase their program spending. So the rebate, considered in isolation, will flow directly to pre-tax earnings. Some of the benefit will then flow back to government via higher taxes (30% of the pre-tax uplift). BBY has adjusted FY10 and FY11 earnings to reflect the announced rebates.  We also assume that the 50% reduction in FY11 will be continued thereafter, as part of a general re-structuring of government charges relating to use of spectrum.Our 12 month share price target increases from A$1.79/sh to A$2.10/sh (being the FY11 blended DCF/DDM valuation). We retain a BUY recommendation.   

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BBY is an Australian focused stockbroking, corporate advisory and asset management firm. With offices in Sydney, Melbourne, UK and UAE along with a global presence in the USA and Asia, BBY is well positioned to service its clients’ local and global needs.

BBY’s primary objective is to be the leading Australian owned securities firm with a global platform, providing the right solutions to high growth, medium to large sized Australian Companies and their Investors. BBY is able to allocate significant resources to ensure we solve our client's problems by getting the best possible result in meeting their objective. BBY’s long term commitment to its clients is strongly supported by well-regarded research and experienced corporate finance and institutional broking teams.

For two consecutive years BBY research has key picked top performers. BBY picked in 2009 Extract Resources (EXT), the third best performing stock and in 2008 Linc Energy (LNC), the number one performer on the ASX/S&P200.

Established in 1987, and formerly known as Burdett, Buckeridge Young, BBY has developed a reputation for providing focused, quality services, innovative solutions and high level execution for its institutional, corporate and high-net-worth clients.

BBY is an independent Australian firm, with the strength of an international partnership with leading Asian investment bank CIMB-GK, (www.cimb.com), and an equity partnership with major US investment bank, Jefferies Inc (www.jefferies.com). 


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