CMO

More media companies withdraw earnings guidance

COVID-19 continues to severely affect financial earnings globally
Infratils share price dips on news of Vodafone buyout.

Infratils share price dips on news of Vodafone buyout.

Media companies are continuing to withdraw their earning guidance as COVID-19 continues to spread and affect business operations globally, while others suspend trade altogether.

The ASX has plummeted, despite $66 billion worth of stimulus measures, with the dollar reaching as low as 55 cents last week, before rebounding slightly. However, the current lockdown has seen the ASX drop lower than GFC levels. The top 200 have dropped 36 per cent in the last two weeks, 

Following Nine Entertainment's (ASX:NEC) first-half result release in February, the media company has revised its FY20 guidance. It said in a statement while the short-term impact remains limited to date, with Nine’s March quarter FTA ad revenues continuing to track close to flat and overall results for the quarter broadly in line with company expectations, the forward ad market is becoming increasingly difficult to reliably predict.

Nine’s half-year results were down, 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. Its 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 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, up 12 per cent on the previous corresponding period (pcp).

The securities of Southern Cross Media Group Limited (ASX:SXL) have been placed in trading halt at the request of SXL, pending it releasing an announcement. The securities will remain in trading halt until the earlier of the commencement of normal trading on Wednesday, 25 March 2020 or when the announcement is released to the market.

Seven West Media’s (ASX:SWM) has withdrawn earnings guidance for FY20 also. The AFL has announced the suspension of all games until the end of May 2020 and the Olympics look almost certain to be postponed. Likewise, local productions are facing challenges with travel restrictions and COVID-19 issues. 

It recently reported a loss of $67 million. Total revenue was down 3.2 per cent to $773.3 million for the half-year to 28 December 2019. Underlying net profit after tax was $69.3 million, a fall of 22.5 per cent on the previous year, while EBITDA of $136.6 million and EBIT of $119.7 million were down 20.1 per cent and 20.8 per cent respectively versus the prior corresponding period.

Seven West put the poor results down to a challenging advertising market, with metro free-to-air TV declining 7 per cent and a total advertising market decline of 8.5 per cent. However, the broadcast video on-demand (BVOD) market was up 42 per cent.

Ooh Media withdrew its earnings guidance last week and has undertaken a trading halt, pending an announcement around capital raising. 

In a statement to the ASX, the company said performance in the first quarter is in line with the current financial year earnings guidance provided at the full-year results on 24 February 2020. The company's guidance forecast for FY2020 included underlying EBITDA of $140 million - $150 million, and Capex guidance of $60m - $70m.

However, deteriorating economic conditions and market uncertainty caused by the pandemic has made forecasting full-year revenue in the current environment difficult. As a result, oOh!media has withdrawn current financial year earnings guidance for the time being.

Likewise, Twitter has withdrawn its revenue and operating income guidance for the first quarter of 2020. The social media giant expects revenue to be down due to advertiser demand. Twitter is also withdrawing its outlook for headcount, expenses, stock-based compensation, and capital expenditures for the year.

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.