Digital offers a lifeline for Nine, following half-year results

Media conglomerate reports revenue of just under $1.2 billion, noting softened conditions around advertising

Nine’s half-year results are out, with the media conglomerate reporting revenue of just under $1.2 billion, group EBITDA of $251 million, and a net profit after tax of $114 million.

Post-specific items, the ASX-listed media group noted statutory net profit was down by 41 per cent to $102 million, while profit after tax and minority interests also fell 9 per cent to $115 million.

Nine Entertainment Co (ASX:NEC) put the half-year 2020 results down to ad market weakness including a 7 per cent decline in Metro free-to-air revenues, and the housing market softness impacting Domain’s residential listing volumes. Within the group, Nine Network reported a revenue decline of 6 per cent, from $564m to $531m for the half.

This follows its net profit after tax of $234 million for the 12 months to June 2019, which was up 12 per cent on the previous corresponding period (pcp).

The results reflect a full 12-month period since the $4.3 billion merger of Nine and Fairfax, which was finalised in December 2018. Since then, Nine completed a review of the combined group and sold off Australian Community Media and Printing (ACM) in June 2018, along with its Events business, which completed on 30 May 2019. On 12 August 2019, Nine announced an all cash, off-market takeover for all of the outstanding shares in Macquarie Media (ASX:MRN) of $275 million.

Digital proved the highlight over the first-half. Broadcast video on-demand (BVOD) market exhibited growth, with a 43 per cent lift in revenues to $87 million, while 9Now, which held its market share of 50 per cent and achieved revenue growth of 44 per cent. User engagement also continued to grow with longform on-demand content viewing increasing by 31 per cent across the half, and live stream viewing up by 137 per cent. 9Now increased its EBITDA contribution from $16m to $27m, up 65 per cent.

Metro Media saw digital (subscription and advertising) revenues grow, and Nine said double-digit growth in digital subscriptions across The Age, The Sydney Morning Herald, and the Australian Financial Review reflected the reweighting of the business to both the digital platform and consumer revenue. Digital advertising revenue experienced growth of 10 per cent, underpinned by growing premium audiences across all mastheads. EBITDA increased by 13 per cent to $44m, the seventh consecutive half of EBITDA growth for the Metro Media business.

During the half, Stan also grew its active subscriber numbers to more than 1.8m. In addition, the combination of ongoing subscriber build and a $2 price rise from March 2019 underpinned a 79 per cent increase in Stan’s revenue across the half. As a result, EBITDA improved by $35m, for an H1 total of $14m.

Traditional advertising was, however, the soft spot, with the 7 per cent decline in metro FTA revenue and also declines in radio. For the six months, revenue across the Macquarie Radio business, which Nine acquired in November. was down by 16 per cent, to $58m. This was driven by the slower Metro radio ad market, which was down 9.7 per cent for the half, as well as issues specific to the Macquarie business. Nine Radio (Macquarie Radio) reported EBITDA of $8 million, down sharply on pcp.

Nine Entertainment CEO, Hugh Marks, said the overall result is a testament to the work Nine has done over the last four years to reposition it for a digital future.

“Strong growth in our digital businesses is helping to offset some of the cyclical headwinds faced by our traditional media assets,” he said. “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." 

Marks also cited significant potential to refocus the cost structure of Nine's FTA business, and said the group looked to remove up to $100m in annualised costs over the next three years.

"These costs 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 year," Marks said. 

“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.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.   

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

looking for the best quality of SMM Panel ( Social Media Marketing Panel ) is a website where People Buy Social Media Services Such as Fa...

Kavin kyzal

How to manage social media during Covid-19

Read more

Thank you for sharing your knowledge. Definitely bookmarked for future reading! Check this website https://a2designlab.com/ with lots of ...

Pierce Fabreverg

Study: Gen Z are huge opportunity for brands

Read more

Thanks for sharing. You might want to check this website https://lagimcardgame.com/. An up and coming strategic card game wherein the cha...

Pierce Fabreverg

Board games distributor partners with Deliveroo in business strategy pivot

Read more

Such an important campaign, dyslexia certainly need more awareness. Amazing to see the work Code Read is doing. On the same note we are a...

Hugo

New campaign aims to build understanding around scope and impact of dyslexia

Read more

Great Job on this article! It demonstrates how much creativity, strategy and effort actually goes to produce such unique logo and brandin...

Pierce Fabreverg

Does your brand need a personality review? - Brand vision - CMO Australia

Read more

Blog Posts

A few behavioural economics lesson to get your brand on top of the travel list

Understanding the core principles of Behavioural Economics will give players in the travel industry a major competitive advantage when restrictions lift and travellers begin to book again. And there are a few insights in here for the rest of the marketing community, too.

Dan Monheit

Co-founder, Hardhat

Predicting the Future: Marketing science or marketing myth?

Unicorns, the Sunken City of Atlantis, Zeus: They are very famous. So famous in fact, that we often think twice about whether they are real or not. Sometimes if we talk about something widely enough, and for long enough, even the strangest fiction can seem like fact. But ultimately it is still fiction - stories we make up and tell ourselves over and over until we believe.

Kathy Benson

Chief client officer, Ipsos

Winning means losing in the game of customer retention

At a time of uncertainty and economic hardship, customer retention takes on much greater importance. CX Lavender’s Linda O’Grady examines the big grey area between ‘all’ and ‘best’ customers when deciding who is worth fighting for and how.

Linda O'Grady

Data Strategy Partner & Business Partner, CX Lavender

Sign in