Despite a $575m loss, Nine is ‘weathering many of the recent storms facing the Australian economy’

Nine’s results this morning saw it post a $575m loss for the 2020 financial year, but CEO Hugh Marks says the business is performing as well, if not better, than should be expected during COVID-19 and its economic impact.

The loss was largely related to a $665m write-down of goodwill relating to real estate business Domain and Nine’s TV broadcast assets. Excluding the write down, profit was $155.9 million.

Nine’s FY20 reported results [click to enlarge]

In an email to staff, Nine CEO Hugh Marks said the loss was to be expected in the current market, but that it doesn’t reflect the performance of the media business.

“You may see the headline number reported today as a net loss of $575m but it’s important to note this number is the result of write downs in the goodwill value of some of our businesses (mainly television and Domain) reflecting the environment where we are today. It is not a direct reflection of the underlying profitability of our businesses or their future,” he said.

“Considering this, our business is successfully weathering many of the recent storms facing the Australian economy.”

Revenue across the building fell 7% to $2.1bn while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 6% to $396.7m. Pedestrian Group, Car Advice, Nine Events and Domain all used the government’s Jobkeeper allowance, with the total amount logged by the end of the year expected to be $12.1m.

Nine’s broadcast revenue [click to enlarge]

Nine focused on savings across its results, reporting its free to air (FTA) costs are expected to be at FY08 levels as of FY21, largely thanks to a reduction in sport and international content costs. Nine Radio is also expected to see cost declines in FY21 and saw its revenue fall 22% to $102.6m.

Digital subscriptions across the business were up, with Nine continuing to focus on diversification. Stan also saw a rise, reporting 2.2m active subscribers currently and 54% growth in revenue compared to 19% cost growth.

For the future, Nine flagged a plan to continue investing in premium TV content and BVOD, boosting digital subscriptions across its publishing business and broadening the offering at Domain. By 2024, Nine plans another $230m in cost savings, mainly across FTA, radio and its publishing business, and for 35% of the group revenue to be from subscriptions.

The business paid a fully franked dividend of 2c per share following the 5c per share paid in April 2020. The market is ‘performing better than expected’ for FY21, and should ‘recover’ when COVID stabilises. Nine is expecting its September quarter to be down 15%.

Nine’s free to air costs [click to enlarge]

“If I can leave you with one final stand out figure from these result it’s this: we are rapidly approaching a threshold where we are a truly digitally led business – across the year, profit from our digital businesses i.e. 9Now, 9Digital and Stan as well as the digital components of Metro Media and Domain, contributed almost 48% of total group earnings,” Marks told staff.

“This is a clear vindication of the strategy we laid out to focus our business towards a digital future, investing in Stan and 9Now, driving subscriptions in publishing and innovating with platforms like 9Galaxy which make it easier for our advertisers to transact with us.

“Believe me when I say we are well placed to accelerate this strategy as the economy looks to recovery in the coming months and into 2021.”


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