Nine Entertainment Co. has announced a 5.1 per cent profit drop in the six months to December 2015, with net profit after tax falling from $88.8 million in the previous year to $78.4 million.
The plunge is slightly improved on the 6.4 per cent fall in profits from the half yearly results in December 2014, and comes as the company announces a shuffle to its boardroom.
David Haslingden will step down as chairman and non-executive director, effective 1 March 2016, with Peter Costello, currently an independent, non-executive director, will take over as chair from this time.
“The company has achieved a lot in that short time: going public, consolidating into a 5 cap city network, renewing key cricket and NRL franchises, disposing of Nine Live, launching Stan and 9Now and transitioning to a balanced share register of leading Australian and International funds managers,” Haslingden said.
The network’s revenue of $690.3 million marks a dip from $726.7 million in the previous period, while Group EBITDA fell 5.3 per cent to $127.9 million.
Zooming in to Nine’s TV division, the Network revenue fell around five per cent, losing a total of $34.8 million, with its earnings dropping by nine per cent, while digital revenues declined by two per cent, or $1.7 million, with earnings climbing 13 per cent.
“Competition from both within and outside the sector kept pressure on our revenues. However, our stringent cost focus has resulted in a group-wide cost decline of 5 per cent for the period, mitigating much of the revenue impact,” CEO Hugh Marks said.
“We are excited about the opportunities we have as a business – to be able to invest in more and better performing local content as our international spend reduces; through enhanced content integration between our television and digital businesses; and a growing one-to-one consumer relationship delivered by our new streaming and AVOD platform, 9Now. We are also very pleased with the first year’s performance of Stan.”
As of December 31, net cash was around $52 million, which also reflects the receipt of the Nine Live proceeds.
The free-to-air market remains very challenging, with a 0.4 per cent decline in the market in the December half and a soft opening to the second half. Nine Entertainment now expects the metro FTA market to push a flat to downward margin over the year.
Regional markets are expected to continue to underperform their metro peers, with advertising revenue down by 6.6 per cent on first half of FY15.
The company also managed to get its costs down $23.5 million, despite an increase of $17 million in sports costs due mainly to the broadcast of the Rugby World Cup and UK Ashes series, as well as the costs associated with the launch of the new 9HD and 9Life channels.