Nine Smacks it out of the Park




Nine Entertainment joined rival Seven West Media and regional operator Southern Cross in reporting a solid rise in earnings for the year to June.

Unlike Seven (and like Southern Cross), Nine will pay a final dividend; in Nine’s case 5.5 cents a share for the year to June 30, underlining just how strong it is compared to its local and foreign owned rivals in the sector.

The final will take the total dividend for the year to 10.5 cents, up from the 7 cents a share paid in 2019-20.

Nine reported a 43% rise in earnings to $565 million before specific items on an 8% jump in revenue 8 to $2.3 billion.

After excluding one-off items and minority investments, profit came in at $261 million, ahead of analyst forecasts for $255 million.

Net profit after tax of $183 million was recorded for the year to June compared to a loss last year after impairments and write downs.

But the financial report and the higher revenue, profit and dividends didn’t impress the market and the shares slumped 10% to $2.69.

Investors took fright at talk of higher costs in Stan, especially with Stan Sport.

Then again, investors already get nervous when costs are mentioned, even though many times they overthink the situation, especially with the media.

But the real reason was probably more like investors thought, based on the results, that the near 70% surge in the share price in the past year had exhausted itself.

A specific item cost of $109 million was reported in the period, which was largely made up of a $62 million write-down of Nine’s radio division, which includes 2GB and 3AW.

Nine bought control of Macquarie in 2019 in a bid that valued the network at $114 million (Nine already owned 54% of Macquarie, having bought that in the 2018 merger with Fairfax).

Nine’s new CEO, Mike Sneesby said the company had been able to execute its long-term strategy despite economic factors caused by COVID-19.

“Our television and publishing businesses have both reached critical inflexion points,” Mr Sneesby said. “With the foundation of Nine’s unique assets, strong cash flows and a supportive Board, we have a clear vision for the future as Australia’s media company.”

"We are starting FY22 with strong momentum across all of our businesses — in terms of audiences and revenue, advertising and subscription. With the foundation of Nine’s unique assets, strong cash flows and a supportive Board, we have a clear vision for the future as Australia’s Media Company,” Mr Sneesby said in the statement.

Nine’s streaming service Stan, which contributes a large amount to the company’s market value, reported 2.4 million active subscribers for the full year, 250,000 of which were subscribers to the sports package.

Nine’s metro free to air (FTA) ad revenue is expected to be up almost 20% in the FY22 year to date compared to the same quarter last year - the first quarter of 2020-21 saw a big fall and then a big rise in the December, 2020 quarter.

The company forecasts 2021-22 Publishing EBITDA to grow by $30 million to $40 million. In its subscription business, Stan’s revenue run rate is more than $340 million with total FY22 costs expected at the lower end of the previous $70 million to $90 million guidance range.