Hugh Marks reflects on his final results as Nine CEO: ‘It’s time for a new energy’

The last time Hugh Marks spoke to investors was at an investor strategy event on 19 November, five days after his shock resignation was prompted by a relationship with a former executive.

Yesterday, he presented to them for the final time in his capacity as Nine’s CEO when he delivered the media business’ half year results for the six months ending in December: net profit surged by 79% to $182 million, revenue was down 2% to $1.2 billion, and earnings before interest, tax, depreciation and amortisation (EBITDA) were $355 million.

The share price is currently at a record high of $2.93 – the first time Nine has ever gone over a $5 billion market capitalisation.

Investors seemed impressed. One complimented Marks for answering his questions well, “as always”. A number commented on it being his final appearance on behalf of Nine. There was banter, as the chief executive called out one person for asking four questions rather than the three they promised.

Marks and CFO Phillips delivering yesterday’s results. Credit: Yianni Aspradakis

When I speak to Marks afterwards, he says he feels a “sense of achievement”. The search for his replacement is almost complete, widely understood to be a two man tussle between Stan’s boss Mike Sneesby and chief digital and publishing officer Chris Janz. Marks has overseen five years of enormous change, most notably driven by the Fairfax acquisition. And despite the unforeseen timing of that Saturday afternoon resignation, he’s adamant that, especially now the News Media Bargaining Code has passed (we spoke just hours before it did), “everything I set out to do is done”.

He’s accomplished “everything that I set out to do at the beginning, to provide the foundations for this place to actually grow into the future”.

“It’s time for a new energy to come in and operate what we have here,” he tells Mumbrella.

“There’s good people here as well, a lot of good people, so it’ll be sad to not be part of their lives day to day, but I’m sure I’ll find other things to keep myself occupied.”

Stan Sport launches ‘ahead of expectations’

Marks handed in his notice just days after announcing the launch of Stan Sports, a $10 a month Stan add on that began a sports streaming battle between the Nine platform, Foxtel’s Kayo, and Amazon.

Seven’s CEO James Warburton told Mumbrella last week that Stan and Kayo are “selling packages, which no doubt will be in loss. How long and how sustainable will it be?”

But Stan’s EBITDA jumped 161% for the half, and Marks claims Stan Sport will only continue to drive up subscriber numbers. It launched on Friday, coinciding with a first match of the rugby season that attracted 200,000 viewers – triple the audience of last season’s corresponding game. 97,000 metro viewers tuned in on free to air multi-channel, 9Gem, and a reported 150,000 nationally, meaning the remaining 50,000 watched via Stan Sport.

“We’re really pleased. When you’ve got a sport that’s able to multiply its audience by a factor of three times, as opposed to 30%, you’ve gotta be happy with those numbers,” Marks says.

“That puts us ahead of expectations, which is really exciting.”

Of the netball returning to Foxtel, with some matches to air as part of Kayo’s freemium model, Marks told investors that it wasn’t worth what Netball Australia wanted Nine to pay.

“It had been a great part of our business, but at the price that was being touted … when we like to have all rights and play a role with a sport rather than just be a broadcaster, that wasn’t where that sport wanted to go. We were outbid by another party. Again, that will happen. We will be rational about the decisions that we make.”

‘You have a top one, Tom: revenue’

While Stan was one of a number of bright spots in yesterday’s results, two weaknesses stood out: radio and print. Chief financial officer Maria Phillips called the Nine Radio performance “disappointing” – revenue was down 24% and EBITDA 62% – but Marks claims the sales team can turn it around; it just needs to be better at securing direct bookings.

“Radio audiences are great, they’ve just got to sell it,” Marks says.

“As I said to Tom Malone [head of Nine Radio], the other day, ‘You have a top one, Tom: revenue’. And they should be able to write that revenue because of the audience results they’ve got.”

To address radio’s softness, Nine Radio has ‘refocused’ its sales team. Mark explains that: “In television, 95% of our revenue comes from agencies. That mix is very different than radio.

“Television also carries a lot more national advertisers, radio carries a lot more local advertisers. So the two things working against us is actually, market wise, local has taken longer to respond than national. So that’s why radio is lagging television.

“And from our own perspective, whilst we did a good job increasing our agency revenue, we didn’t do a great job on our revenue from direct clients. And so that was probably an error we made, [we did] a restructure of our sales team, which we’ve addressed, and we would expect that to improve as we go forward.”

Source: Nine. Click to enlarge

Print advertising was back 25% for the half, and retail sales dropped by 18% given COVID-19 meant people weren’t buying newspapers in CBDs or airports.

“I think you will see a recovery of print volumes as people start coming back to work and offices restart, airlines restart, hotels restart. And that’s obviously had a bit of an impact on the business,” Marks elaborates.

“But I think, importantly, you saw the growth in digital subscription revenue [up 26%], and now with the digital platform revenue [the licensing deals with Google and Facebook] on top of that, that business’ gonna go from strength to strength into the future. So big credit to Chris Janz and the team there.”

The CEO is most pleased with the “the digital earnings component of our business, which, even though it was only 40% in this result, because obviously free to air television had a really strong result, it grew by 50 something percent [53% to more than $140 million], and if you separately valued that business on its own in this market, it would be really significant”.

“What that means is if we’ve got that much growth in the business, that really sets us up for the future,” he notes.

“Having achieved that and having achieved it at scale – we’re doing 150 [million of digital EBITDA], other players are doing in the teens – that really puts this business on a separate basis to anyone else in this market, in terms of our traditional competitors.

“And the other thing I’m proud of is we’re in a position to compete with our new competitors, the digital players. I feel really good about that. And I feel really good about our audiences. Our audiences are strong on every platform, it’s always been a focus of mine.”

I finish what could be my last interview with Nine’s Hugh Marks by asking him what his single biggest achievement in this five year run has been. He can’t narrow it down to one, so “I’ll say two”.

“One is our content performance on every platform is excellent. And at the end of the day, I’m the leader of a content company, so you can take no greater delight than your content performance.

“And, from a business perspective, translating that to a significant growth in digital earnings is the other thing that I’m obviously most proud of, because that talks to the ability of the business to continue to grow into the future.”

Brittney Rigby

Brittney Rigby was Mumbrella's deputy managing editor - news and analysis. She left Mumbrella in April 2021.

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topics Chris JanzHugh MarksMike SneesbyNineNine PublishingNine radioNine resultsStanStan SportTom Malone

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