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‘We had no control over Daily Mail costs’ and it was unprofitable says Nine CEO on exit from JV

Nine’s senior executive team has used the half-yearly investor call to shine new light on its reasons for exiting its joint-venture on news website the Daily Mail Australia.

Marks: "We had no control over the costs of the business"

Marks: “We had no control over the costs of the business”

Today’s profit result saw Nine include a $9.4m write-down in costs, associated mainly with the conclusion of the Daily Mail joint-venture.

When asked by investors about the reasons behind the exit CFO Simon Kelly said Nine’s strategy was to move towards 100%-owned properties: “With the Daily Mail we owned 50% of the business and were diverting our audience to the Daily Mail and only getting a 50% return on that audience.

Nine CEO Hugh Marks then jumped in, adding: “It was worse than that, cause we had no control over the costs of the business. It comes down to the same answer for us – as a business, we focus on what content do we need on platforms to derive great profit results for our business. 

“The Daily Mail exit is another example of the same analysis we have applied (elsewhere).”

In January, Nine and the Daily Mail General Trust announced the split, with a key driver for the sale being a frustration of the Daily Mail about how Nine was selling the product, and a concern it was pushing its own properties ahead of the joint venture.

Parsons:

Parsons: Our focus is on ‘positive earnings’

Nine chief marketing and digital officer, Alex Parsons, noted that in the future Nine will focus on businesses with “positive earnings.”

“I think for us it is around how we drive a business which has great revenue and great earnings for our business,” said Parsons.

“Clearly that wasn’t the case with the Daily Mail and so we need to focus our efforts on businesses, which can generate revenue and earnings for our main company.

“We will do that through other models and other businesses into the future but the core for us is it has to be positive earnings.”

New CEO Hugh Marks was also asked for his views on media reforms and the potential for mergers between the metropolitan TV networks and their affiliate stations amid Nine’s $33.3m write-down of its NBN business.

“Anything is worth owning at the right price – the question is what’s the right price?,” asked Marks.

“There is no point in us overpaying for a regional television business that is, at the moment at least, showing a more declining revenue market more than I believe will be the case in metro.”

“What are our opportunities in regional? I think we have this period over the next six months to really thoroughly examine a number of options that stand in front of us and make sure we take the best option going forward.

“We will look at any opportunity that comes at the right price and right long-term outcome for shareholders.”

Asked about Nine’s revenue position and whether it can maintain its 38% share of revenue into 2016,  chief sales officer Peter Wiltshire noted:

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Wiltshire: The Voice should help Nine this fiscal year.

“We have a change in timing for some of our major programming,” said Wiltshire. “The major example of that is The Voice, which last year fell in the current year and this year it will be inside the fiscal period with second series of The Voice.

“It has been put forward into May and The Voice is a high-rating property for us that we can effectively monetise.

“That alone helps underpin what is coming in the quarter four period but there is no doubt that the current quarter, as we have highlighted, is a challenging period, given the factors we were impacted from the cricket – primarily at the end of January.

Do we think we can deliver somewhere around a 38 for the full year? Absolutely. With the slight over-performance in the first half of the year being a 38.2%. That in itself helps us plus there is some stimulation from unique events and while we aren’t sure when the federal election will be you would expect it this year along with the census. ”

Nic Christensen 

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