Nine’s group profit squeezed in latest half-year earnings
Nine Entertainment Co. (Nine) has posted an increase in group revenue to $1.4 billion in its half-year result for the financial year 2023. However, its net profit felt some pressure.
The net profit without specific items after tax was $190 million, compared to $225.5 million in the previous corresponding period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) before specific items was $370.5 million, down 9% from the previous year’s record $406.3 million.
The company announced a fully franked interim dividend of 6 cents.
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As at 31 December 2022, Nine’s net debt was $291m on a wholly-owned basis. The company spent close to $67m purchasing about 33 million of its own shares through the ongoing on-market buy-back program.
Broadcast
Nine’s broadcast division included Total Television (Nine Network and 9Now) and Nine Radio. The segment revenue was up 5% to $715.8 million but the EBITDA was down 8% to $223.5 million.
The cost for the entire segment was higher due to “a number of programming one-offs in, which in total added up to around $20 million” such as coverage of the Queen’s death, and continued investments in schedule, the report said.
Nine Network’s reported revenue during the period was $573m, a 3% increase. Meanwhile, the company’s BVOD service 9Now also witnessed a 19% revenue growth to $88.6 million, primarily boosted by live viewing.
Nine Radio saw a 7% increase in ad revenue for this half year, while digital revenues (including streaming) grew by more than 120% to $2 million.
Stan
Speaking to Mumbrella after the full-year results of 2022, Nine’s CEO Mike Sneesby said the company would “absolutely” continue to invest in Stan, pointing to the performance of Originals and Stan Sport in driving subscriber growth.
For this period, Stan’s revenue was up 12% to $206.4 million, but the cost was also up 17% to $188.5 million. EBITDA was down 18% to $17.9 million.
The report explained that the cost was mainly from investment in Stan Sport and Originals, and the launch of a number of new licensed titles, including the first titles from the new Sony output deal.
The current active subscriber base is now close to 2.6 million. The company said it’s looking to “build a long-term library asset, and in live content, primarily Sport, as a key differentiator to other streaming platforms in Australia”.
Publishing
The publishing segment performance from comprises masthead like The Sydney Morning Herald and The Age, alongside nine.com.au, Drive and Pedestrian remained mostly flat.
The segment saw an 0.1 million increase in revenue to $299.7 million year-on-year. EBITDA was up 2% to $96.1 million. Nine said Digital now accounts for almost 61% of Publishing revenue.
Nine said the segment had a “robust” performance, despite “challenging economic conditions, and a more benign news cycle”.
Digital advertising revenue declined by 8% across the half, which the company said to have reflected “softness in programmatic advertising late in the half”. Print advertising increased by 9%, however.
Domain
Nine’s majority-owned real listing company, Domain,also announced its 2023 first half-year results last week.
The company’s revenue was up 6.5% YoY to $186.6 million in H1, excluding significant items. However, the EBITDA was $46.3 million with a 19.2% decline, marking a EBITDA margin of 26.4% compared to 39.1% in the previous corresponding period.
The net profit for the period was $15.9 million, and the net debt in December 2022 was $172.5 million.
Domain CEO and Managing Director, Jason Pellegrino, said the company has “weathered major events over the past four years” including the Royal Commission and COVID, but the scale of listing decline in the December quarter “eclipsed” both events.
Core digital assets collectively saw an 8.2% revenue increase and an 8.2% EBITDA decrease. Amongst these, Residential and Media, Developers & Commercial revenue decreased while that of Agent Solutions and Domain Insights increased.
Pellegrino added: “It’s pleasing that, despite the market backdrop, we have been proactive in launching new products that have resonated with customers.
“We are very confident in the outlook for depth penetration, especially given we have increased our national depth penetration half-on-half as well as year-on-year.
“Our less penetrated expanding and emerging markets delivered particularly encouraging progress, with higher depth penetration and increased revenue per listing. We are very well positioned to benefit once the listings environment recovers.”
The company declared a dividend of 2 cents per share fully franked. Domain’s share price closed at $3.18 after the result was released on 16 February.
Mike Sneesby
Outlook
CEO of Nine, Mike Sneesby, said about this period’s performance: “We are really pleased with how Nine closed calendar 2022, with strong audience and share performance across all businesses, both subscription and advertising. Nine’s strategic focus on content investment has resulted in clear revenue share growth across all of our advertising mediums.
“Against the backdrop of rationalising investment by international streamers, Stan’s strategic positioning in Originals and Sport, together with its strong licensed content.”
Looking into 2023, the company projected that Total Television’s advertising revenue will decline for Nine in the low-mid-single digits (%) in Q3, and low single-digits increase in its cost.
Nine Radio’s Q3 ad revenues are expected to grow in the mid-single digits (%), supported by a doubling of digital revenues, with an increasing contribution from streaming.
Stan, meanwhile, is expecting revenue and EBITDA growth in FY23.
Publishing’s digital subscription revenue growth is expected to be around 4% in Q3. A more challenging advertising and cost environment in H2 will result in greater-than-normal EBITDA phasing to the first half.
Nine’s share closed at $2.06 on 22 February, with a market capitalisation of $3.51 billion.
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Darcy Song was a reporter at Mumbrella, covering media owners, adtech and social platforms. She left in October 2023.
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