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Nine net profits rise but dragged down by TV licence writedowns

Nine Entertainment Network’ s writedown of its TV licences, as flagged in its earlier half yearly financial results, has put the company into loss for 2017, despite an improved net profit.

The network reported total revenues of $1.238b for the year, a 3.5% year on decline on the previous year, and a $203.4m net loss after tax after the previously announced $260m write off. However digital services, including 9Now and Pedestrian.tv, saw good growth.

However, while revenue slipped, the network’s EBITDA (earnings before interest, tax, depreciation and amortisation) was up 1.9%, to $205.6m. Excluding one off items, net profit after tax climbed 2.7% to $124m.

Nine said the results were consistent with guidance provided in June, with the exclusion of the license fee relief – a Turnbull government one-off – provided to all free-to-air television and radio broadcasters by the government.

Specific items included a $9.5m cost associated with the re-evaluation of Nine’s Pedestrian.TV, which performed better than expected.

Pedestrian.TV’s most recent Nielsen numbers showed a unique audience of 437,000, up from June’s audience of 301,000.

It also included a $260m non cash impairment for goodwill of the metro free to air television business, and an $86m provision to exit its life to series obligations with Warner Bros.

Last year, Nine said it was negotiating to exit the agreement but warned it would incur a further cost of $86m that would be payable over 2018 and 2019.

Nine Digital was one of the main areas of growth, up 3.2% to $157.4m, while EBITDA climbed 11.2% to $28.9m.

9Now has 4m registered users and Stan has 800,000 active subscriptions, according to the latest results.

The company said 9Now has increased its revenue by 40%, and reported 114% growth in long form streams.

Nine Network’s revenue declined 4.4% year on year, to 1.080b, however still remains a strong source of revenue for the company.

EBITDA was up 2.6%, to $188.3m.

Nine anticipates its metro free to air market will decline by 1-2%, with regional areas showing similar trends, however the network is confident its ratings performance will grow.

Metro FTA revenue share is expected to be at least 37.5% for FY18, and group EBITDA is to grow from $186m to $207m.

Hugh Marks, CEO of Nine Entertainment Network was pleased with the results: “The strategic work we did over the past 18 months to reshape our content offering has delivered outstanding results that will benefit our entire business in the mid-term.

Marks is pleased with the results

“Our leadership position in key advertising demographics is continuing to strengthen as we progress through the calendar year.

“With a strengthening balance sheet, and significant operational momentum and leverage, Nine enters the new financial year in a much stronger position.

“Our focus on creativity and content has never been clearer,” Marks said.

“The options available for us to monetise our content have never been more diverse. The media world of the future is video-based and we are right at the forefront of it in Australia.”

He said the company was consistently growing its revenue share in FTA television, On Demand Television and digital publishing.

Marks received a cash bonus of $895,22, earning a total of $3.199m.

At close of trade on Thursday, Nine’s share climbed 4%. It’s market capitalisation is $1.34b.

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