Nine Shares Touch All-Time High on Strong Report




Helped by strong rises in earnings and cost cuts in its key TV, publishing and Stan video streaming business, Nine Entertainment has reported a 79% rise in net earnings to $181.9 million for the six months to the end of December.

That was despite the obvious impact of Covid which generated for the media (like so many other industries) challenging market conditions - this time in advertising and marketing spend by companies and consumers.

The company’s revenue fell 2% to $1.16 billion for the half year to December 31 while group earnings before interest, tax, depreciation and amortisation grew by 42% to $355.4 million. That’s within the upgraded guidance issue in mid-December.

Despite the solid result, interim dividend was left at 5 cents a share, indicating continuing unease about the outlook.

The company’s broadcast (TV and Radio) business reported earnings before interest, tax depreciation and amortisation (EBITDA) of $207 million on revenues of $622 million for the half. EBITDA in the TV business jumped 55% to $171 million and Nine said the profit margin of 33% was the highest since the company re-floated in 2013. Much of the improvement though was due to a $70 million or 16% fall in costs for the quarter.

Radio revenues at Macquarie fell as the metro ad market saw a 19% slide in revenues for the six months, EBITDA was $3 million for the half and due solely to a $9 million or 19% drop in costs.

Publishing also higher earnings thanks to big cost cuts and falling revenues. Nine said the publishing business - mostly Fairfax mastheads along with Pedestrian Group and Drive saw a 95 slide in revenues to $263 million for the half. A 17% or $39.5 million drop in costs more than offset the $24 million fall in revenue and resulted in a 27% jump in EBITDA to $68 million.

Nine said that of the almost $40 million reduction in publishing costs, “around half related to production and distribution, driven both by reduced print volumes and our new printing arrangements. While COVID-related timing issues account for more than half the cost out in this period, incremental initiatives through calendar 2021 and 2022 will more than offset, with the previous outlined target of a $30 million maintainable net cost out (from 2019) remaining intact.” In other words, no letup in cost cutting.

Video streaming business Stan though was the star with 28% rise in revenue to $149 million for the half (thanks to a price rise), a smaller 10% rise in costs to $112.6 million and a 161% surge in EBITDA to $36.5 million, a rise of $22.5 million.

Domain, the 58% owned property listing business saw a more modest 16% rise in EBITDA to $54 million on a 7% slide in revenue to $137 million. Costs were cut 17% which again produced the rise in earnings for the half.

Nine shares were up 9% at $2.91 after touching an all-time high of $2.96 in trading.