Nine flags significant growth in 9Now and lower free-to-air costs at AGM
Nine is predicting that streaming will be the “future of media”, as 9Now reported a growth of 59% this year, while making key investments in marketplaces.
Speaking at the company’s AGM on Thursday, Nine chairman Peter Costello said: “We have growing assets in streaming, which will be a big part of media’s future, and key investments in marketplaces, another area of growth opportunity for us, especially when coupled with our unique, wholly-owned suite of media assets.
“Our competitive position continues to improve, driven by our premium content, and underpinned by our proprietary platforms.”
Last year, Costello warned about the market power of the global digital platforms and the way they were using Nine’s creative content without fair recompense for the cost involved in producing it.
“I am very pleased to now report that, during the year, we were able to negotiate landmark content deals with Facebook and Google that will secure payment to the Company for use of our original content,” Costello said. “This would not have been possible without the Government’s News Media and Digital Platforms Mandatory Bargaining Code.”
“These agreements are essential to properly recompense the cost of employing creators to produce the work which will ensure the long-term vibrancy of our publishing business as we continue to produce quality and challenging journalism,” he added.
Costello said that across the season, average audiences on 9Now grew by 59%, with the service now accounting for 14% of total people watching a show, and 18% of the 25-54 demographic.
“This is the future of our business. Taking our premium content into the digital world, ensuring we can capture audiences and advertisers alike across all available distribution platforms,” he said.
Nine CEO Mike Sneesby added that free-to-air costs were 2.5% lower, with the impact of the NRL season returning in full, being more than offset by COVID-related and one-off savings due to the delay of the 2021 Australian Open and the government waiver of spectrum charges.
“While recovery in the radio market has lagged television, there were clear signs of improvement through the second half of FY21, with Nine Radio’s ad revenues up 13%,” he noted.
In addition, Nine’s radio audiences grew by 11% across the year, importantly including growth of 14% in the 25- 54s, Nine’s key agency demographic. Moreover, the cost base has been significantly re-aligned as Nine flagged signs of a positive trend in direct sales that could lead to improved results as the market recovers.
“Nine’s Publishing business reached a key inflexion point with digital growth in this result outpacing the decline of print and of course, with a favourable cost base, where the profitability of each incremental digital subscriber dollar is markedly higher than print,” Sneesby said.
He also highlighted the success of Nine’s 2021 season of The Block, commenting that year-on-year audiences were up by 9%. Sneesby added that whilst free to air audiences were up marginally, it was streaming through 9Now that drove the majority of our year-on-year audience growth.
Meanwhile, with the recent launch of VOZ providing data on incremental reach and co-viewing, Nine also expects there will be a natural benefit to advertising yield.
“Whilst international studio content has been instrumental to Stan’s success to date, we will continue to focus on expanding our ownership and control of content – doubling the volume of Stan Originals in FY22, combined with continued growth in live streaming and Stan Sport,” Sneesby said.
In addition, the March cyber-attacks were also mentioned. Costello noted that these attacks are becoming very common and are a key risk for all businesses.
“At the Board and Company level, we had identified cyber-attack as a major risk and proactively planned our response well before this event,” he said, with Nine saying it’s making cyber defence a key priority.
During a media call after the AGM, when asked about the profitability of Nine’s streaming service Stan, Costello said the streaming service should be treated like a pure technology business when assessing results.
“You shouldn’t be surprised that you keep reinvesting and reinvesting and reinvesting because with a growth business, you’re trying to build share. You’re not trying to take short term property, you’re trying to build a share,” he said.
When asked about possible supply chain issues in regards to manufacturing newspapers, Sneesby said he had no concerns.
“I don’t see any major issues in the supply chain which will be material, certainly to our broader publishing business, our broader business. As you would have heard today, with that continued shift into profitability delivered from digital, it further minimises any risk in that part of the business.”
