Ann: Interim Results Investor Briefing - change of date, page-17

The 1H18 value in use disclosures on the goodwill tell you that they changed all three key inputs, per p13 of the 1H18 report:

1) 5-year CAGR went from (2.2%) to (3.2%) - per FY17AR, an 0.5% decrease was equal to $6.2m, so this impact was ~$12.4m;
2) Terminal growth rate went from (2.2%) to (3.2%) - per FY17 AR, this doesn't impact the value of the licence;
3) Discount rate went from 11.14% to 12.64% - per FY17 AR, a 2.0% increase would lead to a $5.1m impairment, so the 150bps change was presumably responsible for ~$3.8m.

The aggregate of those 3 impacts is ~$16m, meaning the remaining ~$15m of the impairment is perhaps attributable to assumed changes in programming costs. It isn't necessarily the case that the entirety of that $15m is attributable to the C7 affiliation agreement - PRT also produce some of its own content (local news bulletins), as well as buys some non C7 content - but i think it's fair to assume that most of it has to do with the assumption that C7 are going to ramp the affiliation fee in the next agreement. It's been well flagged by PRT management that affiliation fees are going up, and C7 have no economic incentive to not whack PRT in the next negotiation now that C7 have sold their strategic PRT stake. Exactly how much is the 64 million dollar question - market rate back in 2013 when the last PRT/C7 deal was signed was ~40% as per the following - https://www.theaustralian.com.au/bu...080092256?sv=b95857f42cfac2af8271f102b67b3627 - but PRT has to pay a bit of a premium to market because C7's programming pulls the highest ratings. Market rate now seems to be closer to 50% according to deals announced over the last few years, so i expect PRT to have to pay 5-10% more in the next round. Based on PRT's 1HFY18 run rate, every additional 1% of PRT's revenue that C7 gets in the next affiliation agreement will be a ~5.5% hit to PRT's EBITDA, so in a bad scenario (10% increase in affiliation fees as % of revenue) it's feasible that PRT's profitability falls by ~50% 15 months from now purely as a result of affiliation agreement changes.