Nine Entertainment has unveiled a revenue drop of 1.7 per cent in its half-yearly results announced this morning.
Revenue for the half year to December was $1.19 billion while group earnings before interest, tax, depreciation and amoritisation (EBITDA) was $250.8 million on a reported basis. Net profit after tax fell by 18 per cent to $114.3 million.
Key takeaways included:
• Strong growth from digital video businesses
• $35 million EBITDA improvement at Stan, with subscribers exceeding 1.8m million
• 65 per cent growth in EBITDA at 9Now, with market leading BVOD share of ~50 per cent
• Further investment in 9Now to accelerate growth into the broader digital video market
• Result was heavily impacted by challenging cycles
• Broad based ad market weakness including a seven per cent decline in Metro FTA revenues
• Housing market softness impacting Domain’s residential listing volumes
• Synergies of $9 million identified following completion of the Macquarie Media acquisition
• Nine expects FY20 EBITDA at a similar level to FY19
The company has previously told the market at its AGM last year that it expected “low single digit growth”.
The results were impacted by a five per cent drop in Nine’s TV and radio ad revenues, which were $630 million to December 2019. Its metro publishing business – that includes The Sydney Morning Herald and The Age – fell by three per cent to post revenues of $288 million.
On a more positive note, Nine’s SVOD service Stan posted impressive revenue growth to December, up a whopping 79 per cent.
Nine’s results are in line with general market sentiments that have been hampered by poor ad spending post May’s federal election.
Last week, Seven posted its results that showed the broadcaster lost $67 million in its half-yearly results to December 2019. The announcement sent Seven’s share price crashing to just 21 cents late last week.
As of this morning, Nine’s shares were trading at $1.61, but were as high as $2 as of mid-January this year.
Commenting on today’s numbers, Nine CEO Hugh Marks said: “This result is a testament to the work we have done over the last four years to reposition Nine for a digital future. With strong growth in our digital businesses helping to offset some of the cyclical headwinds faced by our traditional media assets.
“We have now clearly established Nine as the leading domestic player in the digital video market with both 9Now and Stan recording very strong growth in the period. Growth that we expect to continue into H2. We have successfully unified our first party database across all of our owned and controlled businesses, meaning we are in a position to offer our partners the benefits of more targeted advertising across the Nine suite of assets.
“We have invested in technology through 9Galaxy which will enable our inventory to be traded seamlessly, and in a premium content mix that works across linear and on-demand television. Positioning us to compete more effectively with the global technology companies for revenue.
“Recognising this company-wide evolution, we believe there is significant potential to refocus the cost structure of our FTA business, targeting the removal of up to $100 million in annualised costs over the next three years – costs that will not inhibit our ability to continue to invest in the growth opportunities around premium revenue and digital video, as we have done successfully over the past three years.
“Nine is in a unique, and incredibly exciting position. We own platforms across linear television, digital, print and radio – leading assets, and all of which are evolving towards digital distribution. Almost 40 per cent of our earnings are now sourced from growing digital platforms. Together with data and technology, we have the ability to distribute messages to mass audiences as well as to small but valuable, addressable audiences. We have the systems to ensure seamless and efficient delivery for advertisers and we have the balance sheet to invest in the content that works for Australians.”
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