Nine profit and revenue down after ‘weaker-than-expected’ start to financial year

Nine Entertainment’s revenue has declined by 4.5% and net profit after tax is down 4.3%, with the company attributing the falls to Seven’s coverage of the Olympics and a weak December half in the metro free-to-air TV market.


For the six months to December 2016, revenue for the group was $659.2m, down from $690.3m over the corresponding period in 2016 – a decline of $31.1 million, or 4.5%.

Group EBITDA [earnings before interest, tax, depreciation and amortisation] was also down 6.4%, from $127.9 million to $119.7 million.

Net profit after tax fell $3.4m, from $78.4m to $75.0m – a drop of 4.3%.

Net debt however, remained unchanged from June 30 2016, sitting at $178m on December 31.

A statement from the group released to the ASX this morning said the free-to-air market had not performed to expectations.

“After a weaker-than-expected December half, the metro free-to-air market is expected to be down low single digits for FY17. Q3 market revenues are likely to be only marginally down with some early signs of a more positive market,” the statement said.

As a result, regional markets are expected to slightly outperform their metro peers, Nine said.

In releasing its results, Nine noted its disposal of its interest in Southern Cross Media during the period for a pre-tax gain of $29m, the $85m (pre-tax) settlement to exit key elements of the output deal with Warner Bros, announced in August 2016 and $3.9m worth of restructuring costs.

Nine Network itself accounted for $578.2m of the group’s revenue, down $32.5m from the corresponding period last year – a drop of 5.3% – which it attributed to Seven’s coverage of the Olympics and a softening market.

“Nine Network reported a revenue decline of 5% for the period, reflecting a lower revenue share in a soft free-to-air market – both of which were negatively impacted by the Olympics. As a consequence, EBITDA fell by 9% to $109m,” a statement from Nine said.

“The total television market recorded a 2.7% decline across the six months. The metro FTA advertising market recorded  a 4.5% decline across the half, despite the Olympics. The regional FTA markets performed better, with advertising revenue down by 0.4% on H1 FY16.”

Despite the falls in revenue, EBITDA and profits, Nine Entertainment CEO Hugh Marks said the company had made significant progress in rebuilding its free-to-air business and building on new ventures.

“Our on-demand businesses are growing strongly. Our AVOD platform, 9Now, has more than 2.9m registered users, providing a growing first-person database that enables our advertisers to target audiences and will ultimately deliver Nine higher-yielding revenue. Our SVOD joint venture Stan is clearly the leading domestic player in a growing space with more than 700,000 active subscribers and heading towards positive cash flow during FY18,” he said.

The group-wide focus on costs was reaping rewards, he said, with overall and free-to-air costs down 4%, setting Nine up for a positive second half of the financial year.

“We are very pleased with the progress we have made in the past six months and have delivered on our commitment to compete more effectively in free-to-air television at the start of the 2017 ratings year.

“Our unique and complementary mix of television and digital assets continues to meet the changing needs of our audiences, providing an important and diverse foundation for Nine’s growth. And the hard work we continue to do on costs means we are highly leveraged to benefit from the flow-on effect of our audience gains on revenue share.”

Nine will continue to focus on further reducing costs, the group’s release to the ASX said.

“During the half, Nine continued to focus on its cost base. Following on from the declines reported in FY16, Nine Network’s reported costs decreased by a further $21m (4%) for the half – on track to achieve its stated full-year target of 1.5% reduction year-on-year, despite contracted increases in sports rights.”

Nine Digital revenue fell 1.6% to $78.3m, but EBITDA for the digital division was up 13.3% to $13.8m.

“During the half, Nine Digital consolidated its recent launches of 9Now and, and continued its roll-out of innovative consumer-facing content, with 9Honey and the acquisition of CarAdvice. The primary focus now moves to the monetisation of these premium verticals,” the statement said.


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