Following on from Nine Entertainment’s announcement of its half-yearly results yesterday, B&T sat down for a chat with company CEO, the ever charming Hugh Marks, who talked a difficult 2016, Tim Worner’s indiscretions and why he thinks TV’s naysayers are off with the fairies* (*our words, not his)…
Yesterday’s results weren’t great, but not unexpected in this difficult climate?
I think it was a very good result in terms of the context in which it came. Previously, we had a poor start to the ratings in 2016, and we took that poor momentum into the Olympics (broadcast by rival Seven)… it was always going to impact our revenue share and the Olympics really messed up the market for almost six months. To consider our earnings before EBITDA (interest, taxes, depreciation and amortisation) was only down six per cent in all those headwinds, then I think it was a very good outcome.
There’s always that focus on the Nine business, but the real achievers yesterday were things like (the Nine/Fairfax SVOD) Stan and Nine’s AVOD channels. Would you like to see less focus on Channel Nine alone and more emphasis on the profitability of other parts of the business?
We’re developing our content with the perspective that the audience is changing. Audiences are actually consuming more television, they’re just consuming it in a way that suits them. Certainly, there are still very large audiences on free-to-air television, linear, but we’re finding with our key programming, our franchises, we’re getting high demand for those in our catch-up environment. If we can tailor the right content to suit our whole ecosystem then we, as a media business, will represent a greater audience which should represent a greater opportunity for sales. It sounds a simple strategy and really it is as simple as that.
It’s been a difficult time for the free to airs recently, adding to that Seven’s affair scandal has dominated headlines since, December, really. Has there been any adverse reactions to all that from, say, advertisers or audiences?
I’m not really seeing a huge market impact from that, and I really do think it (the Worner affair) is a personal matter. From our perspective, Seven’s ratings performance and their decrease in MKR with Married At First Sight up against it was already predetermined long before any of that happened. I don’t want to comment on it as a personal matter, but none of these things are great for our industry, but I don’t think it has had a huge impact financially or in terms of audience.
You’ve not had any adverse response from advertisers?
Again, I think people tend to look at it as a personal matter; they have their own views, but again (our advertisers) are focused on business outcomes, so we try and divorce the personal views from the business outcomes.
A lot of the press surrounding Seven, Nine and Ten of late has been quite negative. Is it deserved or is it more a case of flux and an industry in change?
Journalists love to write gloom about free to air television. But we’re ahead of the people and we’re reinventing what the TV model looks like. The fact is the players that will win in the future are the players that can take the best content to market across the most plaforms in a way that they are able to monetise. What are we good at? We’re good at content. We’re building our own disruption platforms in 9Now; we’ve got a succesful growing business with Stan and a subscription on demand environment, and we’ve got a growing portfolio of digital publishing businesses across news, lifestyle and entertainment. We’re conciously, as a strategy, diversifying our platforms so we can get more out of the content that we create. If we can do that then we’ll be able to afford to produce the best content in the market.
Yesterday, B&T ran an interview with IPG boss Danny Bass suggesting that it was the out-of-homers that were cutting TV’s grass, what’s your views there?
There’s going to be a return to mediums that help brands build brands and that’s why outdoor is doing quite well at the moment; it’s a brand building medium and they’ve also digitised in the last 12 months and that makes them attractive to advertisers. We’re in that same boat… you talk about TV in gloom and doom, but I’d say television is being redefined. Create great content and distribute it everywhere, that’s the benefit that we have and Facebook and YouTube don’t have. TV has the viewablility, it’s a brand-safe environment, it’s independently audited, it’s all the things that show what we are and our strengths and that should set us apart form others, in-particular those big global tech companies.
Network Ten boss Paul Anderson said last week that the TV business was under “severe duress”. How much would you agree with Anderson’s comments and what are the headwinds for Nine?
I won’t comment on Ten’s statement, and I think that was released for a purpose that had to do with something other than the state of the market, (and that was) about licensing. It was an odd statement to make and I’ll leave that to them. In terms of the industry position, we’re launching new shows…. Take Married At First Sight, that was a huge risk for us to take at the top of the year. We’ve got Ninja Warrior launching, a new show from Hamish and Andy, we’ve launched Travel Guide and Family Food at the end of the year; Nine is taking risks, but what I would call consciously well informed risks on new porperties. Beyond that we’re launching new stuff in the digital channels, we’re taking risks left, right and centre; but they’re considered risks. The message I would like is that considered risk is something… it’s a principal that we apply to every decision. If you don’t take risks in a creative business then you’re not going to get very far.
Surprisingly, you free to airs have played nice of late, but with ad spends tightening surely it’ll once again be about stealing share and ad dollars from Seven and Ten?
Share has always been a competitive element between our business and the other free to air operators. But share’s not the only game in town and we base our performance on revenue; so we’re actively coming up with revenue options that aren’t just necessarily targeted at the other networks, they’re targeted at the whole revenue market. People used to say we play in the free to air television market which is a $3 billion market, but there’s a $6 billion video market, and that’s the market we’re targeting.
Seven’s Tim Worner now infamously said late last year that the content created by the free to airs hasn’t been much chop of late. Adding to that, the SVOD players – Netflix , inparticular – are spending tens, 100s of millions producing new shows, how do you even compete in that environment?
They’re different products for different markets. That’s why we’ve diversified into different businesses. Our subscription on demand business, we’ve built a business in that space that is acquiring that sort of product from around the world. Free to air is a very different model to Netflix, and I think they complement each other rather than being in conflict.
In regards to Tim’s (Worner) comments, he said that in a point of time we’re going to make better shows and at some time we’ll make worse shows, but I think for a long time free to air has consistently bought a lot of good product to market. Sure, at a particular moment you mightn’t have the best product, you feel you should’ve done better than we did, but we rectified that and we’ve got shows that are enjoying great talkability and greater audiences across free to air television, capture and the digital environment.