The trend of negative half-yearly results for the free-to-air TV networks continues, with Nine Entertainment (NEC) announcing a $236.9 million loss this morning.
The loss is a big swing away from Nine’s $320.8m profit a year earlier, while the group’s underlying profit was $75 million in the six months to 31 December 2016 – down 4.3 per cent year-on-year.
Nine’s revenue dropped 4.5 per cent to $659.2 million in the six month to 31 December 2016, while its earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 6.4 per cent to $119.7 million.
The group’s TV division saw a 5.3 per cent drop in revenue to 578.2 million during the first half of FY17, which it said reflected a lover revenue share in a “soft” free-to-air market, negatively impacted by last year’s Rio Olympics coverage by rival Seven.
Consequently, the Nine Network’s EBITDA was down 9.2 per cent to $109.4 million over the six-month period.
Nine reported a $260 million non-cash impairment in the goodwill of its metro free-to-air TV business during the period, accounting for “the discrepancy between previous book value and the current market value of NEC”.
The group has also provisioned $85 million to exit its life of series obligations with Warner Bros. on a number of US television dramas and comedies.
“Concluding this component of the output deal gives Nine certainty in relation to this obligation and increased flexibility in relation to future content spend,” Nine said in a statement.
“The associated cash payment will be made over FY18 and FY19.”
The group’s digital business also experienced a small revenue decline – down 1.6 per cent to $78.3 million – but its EBITDA was up 13.3 per cent to $13.8 million.
Hugh Marks, CEO of Nine Entertainment, said he was pleased with the group’s progress over the last six months, noting that it has delivered on its commitment to compete more effectively in the free-to-air TV space at the start of the 2017 ratings year.
“Over the past year, we have made significant progress in rebuilding our free-to-air business,” he said.
“Nine Network won all prime-time key demographics post the Olympics in 2016. And for the important start to season 2017, Nine’s audiences are up 13 per cent and commercial audience share up 3.9 points.”
Marks also praised the strong growth of its on-demand businesses.
“Our AVOD platform, 9Now, has more than 2.9 million registered users, providing a growing first-person database that enables our advertisers to target audiences and will ultimately deliver Nine higher yielding revenue,” he said.
“Our SVOD joint venture Stan is clearly leading the domestic players[s] in a growing space with more than 700,000 active subscribers and heading towards positive cash flow during FY18.”
Nine will pay a full-franked interim dividend of 4.5 cents on 19 April.
The group’s negative overall results come after Seven West Media and Ten both revealed a plunge in profits during the first half of 2016-17.
