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Nine flags significant growth in 9Now and extends Stan’s investment in live streaming

Nine will focus on “digital growth” being key to the media giant’s longer-term strategy to use content to deliver revenue streams from both consumer subscriptions and advertising, across all platforms, after digital earnings “grew strongly” up by 43% and now accounting for more than half of Group’s EBITDA.

Speaking at the company’s AGM on Thursday, Nine chairman Peter Costello said:” Across the year, Nine remained focused on its long-term objectives of growing the Nine business, and reweighting it towards its digital future.

“The growth in 9Now, and the initiation of significant revenue from the digital platforms, are testament to the success of this focus. In addition, we have extended Stan’s investment in live streaming, successfully differentiating our Subscription-Video-On-Demand platform from the plethora of other international services.

He said subscription now contributes 32% of Nine’s revenues. Across the financial year, the company announced dividends of 14 cents per share, up 33% from last year and consistent with our stated policy of a 60-80% payout.

Nine CEO Mike Sneesby added Nine’s live streaming and catch-up business 9Now, had an “exceptional year”, growing its revenues by 41%.

“9Now recorded growth in all key metrics and remains central to the future and growth of our Total Television business.

“9Now is fast becoming Australia’s preferred way to consume live television,” he said. “Smart TVs are now almost ubiquitous across Australian households and the option of live streaming our programming is seamless. Same TV, same content but now, a better-than-broadcast experience in terms of quality, and a markedly enhanced advertising proposition.”

In addition, Nine’s Publishing business recorded a 53% growth in EBITDA to $180 million in FY22. “Our combined Publishing business now derives more than 60% of its revenue from Digital sources, and more than 37% from subscriptions and licensing, both key to the longer-term growth of the business,” Sneesby said.

Mike Sneesby.

All of the key divisions contributed to the EBITDA result of $701 million. Nine reported Broadcasting EBITDA of $401 million, up 21%. This includes Nine’s Total Television business as well as Nine Radio.

Total Television Revenue growth of 10% to $1.3 billion reflected strong growth in both Nine’s free-to-air and BVOD revenues, with digital revenues accounting for around 13% of the total. EBITDA of $386 million was up 19% in FY21.

The Metro free-to-air ad market bounced back strongly across the year, resulting in total market revenue growth of 12% for the year, inclusive of the positive impact of the Summer Olympics in the first half and the Federal Election in the second half. Nine’s free-to-air revenues were more than $1.1 billion, representing growth of 7% on pcp, and a share of more than 40% in the second half.

Sneesby also noted: “Digital subscription and licensing revenue grew by 66% to more than $171 million across the year, with digital subscriber numbers growing across each of the Herald, The Age and the AFR, augmented by the first payments from the digital platforms. Nine also recorded strong growth in advertising revenue across both digital and print.”

In October, Nine violated rules around gambling advertising by showing betting promotions during sporting events, the Australian Communications and Media Authority (ACMA) found.

The investigation found that Nine broadcast a gambling advertisement at 8:21pm during the half-time break of the NRL grand final on 3 October 2021.

Sneesby addressed this breach during a media call after the AGM. “The government does regulate the kinds of advertising that we can put onto our networks or onto our platforms. And Nine engages proactively with the government and with the industries that are impacted by that in the formulation of those regulations. So, it’s not up to nine specifically to drive the outcome, but certainly, we engage positively to look for solutions that have the right impact socially.”

As for sports rights, Sneesby said: “We’re looking at each sport that we acquire the cost of those sports rights, against the revenue that it generates from the subscribers that are attributed. So, that comment says to the fact that some of the sports that we’ve acquired are already delivering a positive contribution where the subscription revenue is greater than the cost of the licensing and production of those sports.

He added: “It takes time and investment to make your money back. We’ve already had very positive outcomes in terms of the sports being better than the expectation when we acquired those sports and we put our business plans together.”

As for replying to a comment in relation to live streaming predominantly being sport, Sneesby explained: “Your other comment in relation to live streaming being primarily sport and the comments about other live streaming do point to the fact that we will look for other opportunities for live streaming outside of the sports space, potentially in entertainment or other genres that make sense in a live  environment.”

Costello thanked Sneesby for his efforts as CEO for a full year. “FY22 marked the first full year for Mike Sneesby in the role of CEO. Mike has brought an increased focus on the growth engines of the Company and developing its digital future, with the insights gained in his previous role as CEO of Stan,” he said. “I’d like to thank Mike, and his leadership team, on behalf of our Board and all our shareholders, for ensuring the ease of his transition, and the continued momentum of the business.”

Costello noted: “The Board itself has worked cooperatively and has given me great support. Prior to this meeting, Nick Falloon advised of his intention to retire from the Nine Board. Nick has been a valuable member of our Board since the merger with Fairfax in 2018, and of the Fairfax Board before that. I would like to thank him for his commitment to Nine, and also Domain, of which he will remain Chairman.

“As a result, we will be looking to appoint an additional Director to the Nine Board over the next 12 months, after completing both a thorough review of current Director skills and a subsequent search to identify the most suitable candidate.”

Sneesby added: “Nine remains confident that the diversification and balance of its earnings profile, across growth, subscription and advertising-based businesses will ensure ongoing, strong profit and margin performance, with almost half of Nine’s revenues coming from outside the traditional advertising cycle.”

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