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Nine grows revenue by 8% to $2.3bn, profits up 76%

Nine Entertainment Co has demonstrated ongoing recovery in its 2021 financial report revealing revenues of $2.3 billion for the 12 months to 30 June, an 8% increase on the prior corresponding period.

Some of the underlying numbers demonstrated Nine’s ongoing recovery off-the-back of a COVID-impacted 2020, with net profit after tax up 76% to $184 million and Group EBITDA before specific items up 43% to $565 million.

Nine FY21 Group Results [click to enlarge]

Nine reported that earnings per share were $0.153, and also announced intention to pay a final dividend of $0.505 cents, for a full year total dividend of $0.105.

Government grants of $10.5 million (with $4.5 million in FY20) were received by Nine, of which $8.3 million is attributable to Domain ($3.6 million in FY20). Nine revealed it has now repaid $2.3 million worth of the grants it has received since the inception of the government’s JobKeeper scheme.

Nine Entertainment Co chief executive officer, Mike Sneesby, said: “After a year which began in the depths of COVID, we are pleased to report 43% growth in EBITDA for FY21.

“Whilst this growth was consistent across both halves, the drivers in each half were quite different, highlighting the strength of Nine’s mix of advertising and subscription-based assets.”

Nine reported that its ongoing recovery was driven by television combined ad spend.

Broadcast revenue, made up of television combined (Nine Network and 9Now), as well as Nine Radio was $1.242 billion, up 10%, driven by a strong second half during which revenue was up 24%.

Costs were reported at $910 million, a reduction of 2% on FY20. Meanwhile, television combined revenue on its own was up 12% with EBITDA up 73%.

Free-to-air EBITDA was up 82% for the year to $251 million, while 9Now had revenue growth of 46% and EBITDA up 48% to $73 million. Daily active users on 9Now grew 13%, and live streaming minutes were up 39%.

Nine Radio revenue was down 11% to $90.8 million, but the second half showed recovery with a 13% increase. Costs declined by $10.4 million, and have gone down 18% in the past two years.

Nine FY21 Broadcast Revenue [click to enlarge]

Nine also revealed that subscription video on demand (SVOD) service Stan’s subscriber base now has 2.4 million active subscribers, with revenue from the service up 29% to $311.8 million.

Costs for Stan grew by 29% to $272.3 million as investment in original content and sports rights continued, while EBITDA was also up 27% to $39.5 million. Excluding sport, costs grew 13%.

Stan Sport meanwhile now has 250,000 active subscribers.

Sneesby added: “We were also successful in continuing to expand our business footprint, particularly in growth areas of the market. In total television, we have carefully invested in and expanded the reach of 9Now, while continuing to grow subscribers at Stan, and launching Stan Sport.

Stan Revenue FY21 [click to enlarge]

Nine’s revenue from its publishing assets, which includes the core metro media business (The Sydney Morning Herald, The Age, The Australian Financial Review), as well as Nine.com.au, Pedestrian Group and Drive, fell 3% or $14 million to $504.5 million.

Retail sales declined 18%, and advertising revenue was down 8% or $13.9 million. Despite that, profit across publishing increased 28% to $117.2 million, off the back of 20% growth in digital subscription revenue. Nine revealed that more than have its publishing revenue base is now digital.

Sneesby said: “In publishing, that growth has manifested as greater audience reach and higher subscriber numbers, which has been augmented by the successful completion of licensing agreements with Google and Facebook, giving us a stable, incremental revenue stream.”

Nine signed multi-million dollar deals with Facebook and Google earlier in the year, estimated to be worth  $30 million to $40 million, which would be added to the company’s bottom line in FY22.

Nine FY21 Publishing Revenue [click to enlarge]

Nine-owned Domain Holdings Australia Limited (DHG) also delivered its results for the 2021 Financial Year, revealing a significant boost in net profit after tax, which grew 66% to $34.3 million year-on-year.

Sneesby that while the year was challenging, “we have been able to establish the base to execute on our longer-term strategy. Our television and publishing businesses have both reached critical inflexion points”.

“Growth in 9Now, coupled with some recovery in free to air, has resulted in a combined television business that we expect can now consistently grow revenues through the cycle. In publishing, digital subscription revenues have now passed $100m, with growth outpacing the decline in print sales.

“Coupled with our ability to more fully monetise the digital distribution of our content, this will enable us to continue to both invest in Australia’s leading journalism and focus on the profitable growth of the business.

“It‘s an exciting time to have taken the reins at Nine, and I commend the team for how they have navigated the challenges of 2021. We are starting FY22 with strong momentum across all of our businesses – in terms of audiences and revenue, advertising and subscription.”

Nine also gave a trading outlook, revealing that free to air ad revenue for the current quarter is expected to be up almost 20% on the same prior period.

FY22 will also see the return of some cyclical costs, and currently Nine expects FTA costs to be 3% higher than in FY21. Nine expects Q1 revenue for Nine Radio to grow in double digits.

Stan costs are expected to be at the lower end of the $70-90 million range, with earnings expected to grow. In publishing, digital subscription revenues are expected to be up 9% in the current quarter, and Nine expects growth of $30-40 million in Publishing EBITDA in FY22.

Total executive remuneration totalled $3.259 million, of which $2.299 million was in cash bonuses. Former CEO Hugh Marks received $1.528 million, with an almost identical pay to his remuneration in FY21, including a bonus of $1.401 million.

New CEO Mike Sneesby received $344,576 including a cash bonus of $263,813. Chief sales officer Michael Stephenson received 818,306 including $393,960 in cash bonus.

Meanwhile, chief financial officer Maria Philips took home $567,946 including a cash bonus of $240,042.

Nine Entertainment Co has a current market capitalisation of $5.08 billion and a daily share price of $2.98.

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