Fairfax’s digital assets are future profit boosters, says Nine’s Marks
Nine CEO Hugh Marks has put his confidence in both Fairfax Media and Nine’s digital publishing assets, describing it as an area of growth and one that will “aid profitability” over time.
Marks, who is currently awaiting Australian Competition and Consumer Commission (ACCC) approval for the Nine merger with Fairfax Media, told Mumbrella he also saw assets such as Allure Media, Car Advice, Pedestrian TV and Future Women as strong.
Previously, Marks has made comments about opportunity and growth in subscription video on demand service Stan, and Fairfax Media’s real estate arm, Domain,
Marks has confident in assets such as Allure Media, Pedestrian TV and 9Honey, not just Stan and Domain
“The complementary assets of the two businesses will really aid profitability in that business over time,” Marks said yesterday. “We’ll get bigger reach, better ability to cross-promote our audience and we’ll get a lot smarter about how we deliver better outcomes to advertisers by better targeting and addressability.
“That business – and it will be quite a big business at scale – has real potential and I would hope the ability for us to drag some money back from Facebook in particular and YouTube as well.”
His comments follow Nine’s financial results for fiscal year 2018, which revealed major revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) growth. Nine Digital reported a ‘record’ revenue increase of 7%, which it attributed to growth in long form video as well as Pedestrian TV and CarAdvice contributions. That growth was despite a decline in display advertising and an EBITDA loss of $14m from Bing.
Revenue from digital publishing – which includes CarAdvice, Pedestrian TV and Future Women – was up from $119m last year to $125m, an increase of 5%. 9Now – which now claims 6.5m subscribers – saw revenue increase by 89% to $40.8m.
It was a strong result for Nine, which this year acquired an 80% stake in Future Women for $2.5m as well as the remainder 40% of Pedestrian TV, for $39m.
“You’ve got Allure and Pedestrian and 9Honey. You’ve got obviously have our news brand and the Fairfax news brands – all diverse and all will be invested in,” Marks added.
Allure Media and our lifestyle and digital assets will ‘aid profitability’
“There’ll be some games to be got just from a) strategy, b) sales strategy and c) hopefully some cost efficiency and making sure that we are not double spending on things. It’s another bright part of the business probably into 2020.”
Overall, Marks was most pleased with the digital business. In addition to 9Now’s contribution of $40.8m, Nine’s joint venture with Fairfax Media, Stan, saw revenue growth of 72% for the financial year.
Although Netflix will still remain a leader in this market, Marks is confident Stan will be able to grow market share. But, he said, it is contingent on “strategic relationships”.
“It has the potential – it’s a strategic asset – it’s got 1.1m plus subscribers and growing reasonably quickly. That’s not easy to replicate. Anyone looking at this market will be looking at Stan and going ‘is that part of my solution for the Australian marketplace’. If we can build the right strategic relationships whether that be with other media companies locally or internationally with that business then it does have the potential to compete more aggressively with Netflix,” he said.
“It’ll [Netflix] always be the market leader but can we increase Stan’s market share? With the right new strategic relationships we absolutely can.”
This time last year, Marks told Mumbrella he was focused on a new approach to sports rights. Since then, Nine ended its relationship with Cricket Australia and obtained a multi-platform deal with Tennis Australia. Marks believes the Tennis Australia will showcase benefits of a multi-platform strategy for future negotiations.
“In sport, it can be a little complicated in terms of you can find yourself in competition with the sports body which we do probably more so with the NRL. With Tennis we acquired all rights so it’s hard for us in a short space of time to see what that looks like this year but as we go forward into the 2020 event and beyond whether we exploit those multiple rights with other partners or ourselves will be something that we’ll be talking about over the next 12 months,” he said.
“We’ve all got to take a multi-platform approach to audience aggregation and you’ve got to have some exclusivity to ensure you can monetise it.”
Another opportunity for Nine would be a new digital radio strategy to increase its market share through Macquarie radio network nationally.
This could entail new music stations available on DAB+ and on the Radio App, such as a Rock format, over 40s such as Magic, and an edgy music format targeting under 40s.
Digital Radio listening is growing rapidly especially with the availability of DAB+ radios in new cars.
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