In today’s daily we have covered stock research on TEN (Expensive). To view Dividend Calendar click here

S&P 500 was down 2.13 points or 0.11% on Wednesday and closed at 1909.78. U.S. stocks ended down slightly on Wednesday as an absence of economic catalysts put technicals in focus, with the S&P 500 ending the session just shy of a third straight record closing high. The S&P 500 also broke a four-day streak of gains. Toll Brothers climbed 2.1 percent to $36.38. The home builder has continued raising prices and boosting sales in the costlier New York and California markets. Twitter jumped 11 percent to $33.77. The operator of the social-networking site has tumbled 50 percent this year amid a rout in technology stocks.

German unemployment rose for the first time in six months in May while Eurozone money supply and credit data proved disappointing. Expectations that theEuropean Central Bank would unveil a package of policy measures when it meets next week were bolstered by the release of weak Eurozone economic data. Gold continued to struggle after suffering its biggest daily drop since Mid-December on Tuesday. The metal was down $5 on the day at $1,257 an ounce the lowest since February.


S&P 500 Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200 was up by 15.5 points or 0.28% on Wednesday and closed at 5527.2 points. Drillsearch energy has struck a deal for an all scrip takeover of the smaller cooper basin explorer Ambassador Oil and Gas. Stockland has increased its bid for Australand Property Group to $2.5 Billion. The iron ore price has fallen further trading at $US 96.80 a tonne down from $US98.10 in the previous session. Google Chromecast device which has been hugely popular in the U.S has been launched in Australia as an alternative to the regular television. ANZ Bank is looking to ramp up its global offerings by offering private wealth clients international equities investments.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:-
  


Stock of the Day – Ten Network (TEN)
 
Network Ten Holdings is a cyclical media company with free to air TV broadcasting. Its strategy is to differentiate itself from competitors Seven and Nine by focusing on the younger demographic, which accounts for 30% of advertising expenditure. Ten network holdings reported a net loss after tax of AUD 8 million with underlying revenue up 4.4% to AUD 315 million for the first half 2014. The loss reflects the step up in television expenses, up 14.3% associated with the investment in Winter Olympics, Big Bash League and Commonwealth Games.


Key events (Source – Company Reports)

With these costs rolling off and the expiry of some production agreements at the end of this year, we expect TEN to reduce its operating costs in fiscal 2015. TEN has failed to capitalize on the audience traffic obtained from the winter Olympics with the recent industry data indicating Ten’s rating share has dropped to an all-time low of 18%. We expect the company will ratchet down its cost structure and focus on deriving profit from a smaller share of the market.


Source – TEN Company Reports

The introduction of commercial digital channels has fragmented audiences from three to nine channels at the expense of channel TEN. Both Seven and Nine released differentiated channels focused different market demographics and have been effective at cross promoting these to attract sizeable audiences. We view this as key reason why Ten’s audience share has deteriorated while it hasn’t helped itself with the quality of its programming schedule. 


TEN Daily Chart (Source – Thomson Reuters)

We think TEN will be looking at how Channel Five in the U.K successfully transformed its performance by cutting costs to generate a return on sub 10% share of the commercial audience. With Ten recording annualized revenue of close to AUD 700 million and costs AUD 640 million, we view the long term opportunity for Ten is to look at cutting cost of content to generate acceptable return for its investors. We believe the stock is expensive at its current price and would review the stock at a later date.
  

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