Nine’s new assets report growth but TV revenue dips in first results after merger

Nine’s television revenue has fallen for the six months to December 2018, but its new wholly owned entities, Stan and Metro Media, have grown year on year.

According to the first half year results for Nine as a newly joined business with Fairfax Media, television revenue was down from last year’s $616.6m to $563.5m, a fall of 11%. Similarly, earnings before interest, tax, depreciation and amortisation fell from $171.9m to $161.1m, before specific items.

The results are the first when including former Fairfax Media assets

More broadly, broadcast revenue – which now includes Nine’s majority stake in Macquarie Media – was down from $705.3m in half one of 2018, to $631.7m to half one of 2019.

Nine has attributed the fall to one less week than the previous corresponding period and the absence of Foxtel sports simulcast revenue. It also said the free to air broadcasting market conditions remained difficult, however the business believes the FTA market will improve in the run up to the Federal election.

Television’s decline led to an overall revenue fall from $723.8m, to $714.2m, according to statutory results. But Nine pointed out it has achieved a 39.3% revenue share for television, despite the conditions.

However Nine’s digital and publishing arm, which includes Metro Media titles The Sydney Morning Herald, The Age, national masthead The Australian Financial Review, Pedestrian and Car Advice saw growth for the first half of FY19, according to pro-forma results.

Revenue for the first half of FY19 was $327.5m, up 4% from last year’s $315.3m for digital and publishing. EBITDA climbed by almost 40%, from $43.2m to $60.2m.

Nine Digital’s revenue was up 86.652 from last year’s $83.4m, and EBIT was $20.68m, while Metro Media grew by 4% after three years of decline, from $231.9m, to $240.8m. EBITDA is now at $9.675m. Nine’s broadcast video on demand service, 9Now, grew its revenue by 51% to $29.1m.

Subscription video service Stan has grown by 50% year on year, from revenue of $43.4m to $65.2m, with EBITDA loss at $21.8m. Domain’s revenue remained flat – at $183.9m for the first half. Stan subscribers now sit at 1.5m, and Nine has indicated the service will make a profit in Q4 of FY19. Stan recently raised its subscription price from $12 to $14 a month.

Overall, statutory revenue results, which includes contributions from Fairfax Media and Stan from the merger implementation date, December 7, showed a fall of earnings before interest, tax, depreciation and amortisation (EBITDA) of 2%, to $177.8m, from $181.3m and profit slipped 7% to $108.5m.

On a pro-forma basis, revenue was down by 3% to $1.203b, but group EBITDA climbed 6% to $251.6m and net profit climbed by 5% to $126m. Nine said investors could expect pro-forma EBITDA of at least $420 million for the full financial year. The pro-forma results consolidate results for the former Nine and Fairfax businesses for the full six months, including Stan, which is now wholly owned. The results also include synergies already realised.

The pro-forma results exclude Australian Community Media and Printing, Stuff New Zealand and Events, which are classified as discontinued operations, as they are for sale. The assets for sale shed 10% of revenue for the first half, from $380.4m in FY18 to $340.8m in FY19.

Nine’s first half results on a pro-forma basis

In a note to staff, Nine CEO Hugh Marks, said revenue had remained stable in a “challenging advertising market”.

“The merger has fundamentally changed our revenue profile. A year ago, in our half-yearly results, 86% of Nine’s revenue came from broadcasting,” Marks said “Today that figure is 54%. Why is that important? Not because broadcast won’t continue to be the great business it is today, but because we’ve invested in a broader business that as a whole will grow.

“Nine today is a media business with a number of key media investments (across television, publishing, streaming and classifieds) which are working and will continue to work closely together and add value to each other. At their heart, most of these businesses have one simple mission: to create great content (be it entertainment or journalism), to distribute it broadly, and to engage audiences and advertisers.”

Nine’s segment results, which includes revenue of new assets from December 7

Restructuring and terminations cost the business $29.6m in the first half, while acquisition related costs came to $13.8m. Nine claims to be on track to reach $65m in cost savings by June 2020. Net debt for the wholly owned business was $228.3m.


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