Digital, TV sales merger and trio of legal battles dent Nine, but SCA deal showing ‘very positive’ signs

Channel Nine has admitted a decision to merge its digital advertising team with TV sales in 2015 is still impacting revenues, while legal issues involving Seven and the chaotic 60 Minutes episode in Beirut also dented the bottom line.

60 Minutes

Chief digital and marketing officer, Alex Parsons, said around 50% of Nine’s $150m of digital revenue in 2016 was generated from display advertising.

But it was still under par and, despite a healthy 18% lift in digital profits, contributed to a 4% decline in revenue.

Parsons blamed the revenue decline on the lingering effects of a flawed move last year to merge Nine’s digital and TV sales teams.

Efforts are now underway to bolster the digital team under digital sales director, Ben Gunn, who joined the network in June from Qantas data marketing offshoot Red Planet.

“Around half of our digital revenues come from display advertising and this is an area where we have not performed to our expectations,” Parsons said yesterday at the release of Nine’s 2016 financial results.

“Two years ago the decision was made to completely merge our TV and digital sales forces which led to the loss of key digital sales talent which has clearly impacted our revenue results.

“In the last six months we have actively worked to address this. We have Ben Gunn as our new digital sales director and he is rebuilding the expertise and accountability on digital sales revenue in our sales team.”

Parsons said the launch of audio/video on demand service (AVOD), 9Now, and a number of other lifestyle categories such as 9Elsewhere, 9Kitchen and 9Homes was “cementing its place in the Nine family”.

It also emerged during an investor call that Nine’s legal bill ballooned by $7m during the year as management defended accusations from Seven that Nine’s Hot Plate ripped off My Kitchen Rules.

The broadcaster was also forced into a legal fight over a controversial edition of 60 Minutes which landed four Channel Nine staff in prison. A third unforeseen court battle saw the NSW Supreme Court reject an application by regional broadcaster WIN to block regional viewers from accessing Nine’s live streaming service.

southern cross austereo

Marks said the decision to move from WIN and strike a partnership with Southern Cross was already reaping rewards, claiming the “landmark affiliate deal” was showing “very positive” initial signs.

“The relationship also enables Nine to operate as a truly national network, providing both operational and advertising opportunities previously unavailable,” he said.

Standard Media Index figures obtained by Mumbrella show TV revenue for Southern Cross Media in July increased almost 60% to $9m compared with the same month last year.

WIN’s revenue, meanwhile, almost halved to 3.47m over the same period.

Turning to Nine’s video streaming service Stan, Marks echoed remarks made by Fairfax boss Greg Hywood earlier this month by declaring the operation is on course to break even during the 2018 financial year.


Nine and Fairfax, which jointly own Stan, have each invested $55m in the business, with Marks revealing further investment of $25m each would be required to hit the break even target.

“The strong momentum achieved in the SVOD industry overall has enhanced our confidence in the business and its ability to continue to grow,” Marks said.

Nine, whose metro free-to-air market share fell 1.9 percentage points to 37% in 2016, warned that its share could be hit again in 2017 as the broadcast rights holder of the Olympic Games historically receives a 1.5 points boost.

Marks refused to be drawn on the precise impact it would have on Nine, or that of free to air rival Ten.

“Looking beyond the short-term impacts of the Olympic Games, the significant increase in premium local content will greatly enhance Nine’s competitiveness in 2017 and provide momentum into FY18,” he said.

“We are adding more local, premium content into the mix….that is what advertisers are demanding.”


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