‘A tough market suits Nine well’: Mike Sneesby on ‘discipline around expenditure’ after results
Nine Entertainment Co (Nine’s) half-year results yesterday saw the group’s revenue grow 5% to over $1.4 billion. However, the net profit was pinched by increasing costs across all segments except for Publishing.
CEO of Nine, Mike Sneesby, said cost control will be one of the focuses for the rest of the financial year, against a “challenging advertising market ahead of us”.
Mike Sneesby
“One thing across the board will be discipline around expenditure as much as possible in the business,” he told Mumbrella. “But we believe that a tough market suits Nine well, and we’re committed to investing in the core areas where we believe we can improve our competitive position.”
While the group’s subscription video-on-demand service, Stan, was not the biggest spender, it was the segment with the smallest EBITDA margin. This part of the operations saw a 17% increase in the platform’s cost in this half-year to $188.5 million.
However, the company was positive about Stan’s outlook further into the financial year, with expected revenue and EBITDA growth. The subscriber number sat close to 2.6 million at the end of December 2022.
Bad Behaviour, one of Stan Originals’ titles launched this year
“If you look at streaming businesses across the world, there are very few in the SVOD category that are profitable year in and year out, and we continue to focus on ensuring that we deliver profitability whilst maximising our position in a competitive market.”
That position, is one boosted by continued investment in Originals to reflect the platform’s local content proposition over an acquisition strategy of international titles.
When asked about whether this strategy made sense from a margin point of view in the long term during the investor call, Sneesby said while there is a cost of production to consider, Stan will not backtrack its local proposition.
What he did point out, though, was that with the new local content quota to be introduced by the Federal Government to international streamers, outlets like Stan may be forced to take some of their productions offshore due to increasing costs, which Sneesby doesn’t think is “the preferred or the desired outcome”.
Looking at the company’s performance overall, a note from Macquarie analysts indicates the EBITDA was in line with the guidance given in December 2022.
Nine free-to-air’s expected high single-digit revenue decline in Q3 was broadly in line with market expectations of around a 10% decline in H2 FY23.
Digital subscription and licensing revenues were expected to decline when excluding the content deals from Facebook/Google.
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Darcy Song was a reporter at Mumbrella, covering media owners, adtech and social platforms. She left in October 2023.
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