The Australian share market is anticipated to start on a high note today after strong performance on Thursday and a positive night on Wall Street. This week, major Australian media companies revealed strong earnings in their FY and HY reports – one of which is stirring controversy after it publicly announced a round of layoffs in July.
In US economic data, the economy, as measured by GDP, contracted at a 0.6% annualised rate in the June quarter. The annual Jackson Hole symposium held in Wyoming today will determine if Fed chairman Jerome Powell decides to continue the aggressive hiking of interest rates.
In the Australian employment market, the recent labour force data reveals fallen employment rates, with unemployment still at a 48-year low. Data from Commsec reveals employment fell by 40,900 in July with full-time jobs down by 86,900 while part-time jobs rose by 46,000.
The unemployment rate fell from 3.5% in June to 3.4% in July (lowest since August 1974). The number of unemployed fell by 20,200, with the participation rate having fallen from a record high of 66.8% in June to 66.4% in July.
Interest rates, heightened cost of living and inflation have all contributed to significantly lowered consumer confidence in the survey held by Roy Morgan and ANZ earlier this week.
Earnings reports from media companies this week revealed that radio is performing notably well when it comes to advertising revenues – the format, which ARN Ciaran Davis noted was more cost and time effective than other advertising channels, has seen consistently strong growth and revenues amongst most market players. The trend is forecasted to continue into H2 and 2023 – but time will tell if it can maintain its desirability.
Out-of-home advertising also has made a comeback to profitability after COVID lockdowns damaged the sector in 2020 and 2021. oOh!media CEO Cathy O’Connor said: “In Q2 of this year, usage of MOVE measurement by agencies was up 41% on 2021, so there’s an enormous amount of interest in this sector. We’re the largest player in the sector, so we stand to benefit greatly.”
Read on for a wrap of noteworthy movements in Australian media and marketing companies this week.
News Corp:
- News Corp’s battle with Australian publication Crikey continues to heat up. The independent Australian publisher took out ad space in The New York Times and The Canberra Times in order to run an open letter to Lachlan Murdoch, stating its intent to defend its journalism in court, after alleged threats of a defamation suit.
- News Corp Australia made 15 involuntary redundancies this week, including several further voluntary redundancies.
- The redundancies come as News Corp reported a record revenue spike last week, up 11% to AU$14.9 billion.
- At the time the redundancies were announced, News Corp (NWS) shares traded on the ASX at $A25.90 as of 24 August, with a market cap of US$15.08 billion (A$21.76 billion).
- Today, NWS shares are trading at $A25.71 on the ASX with a market capitalisation of $10.38B USD – figures that have shrunk over the last several days.
oOh!media:
- oOh!media saw strong results in its H122 earnings released earlier this week, with CEO Cathy O’Connor confident that the OOH sector would continue to see positive growth in the foreseeable future.
- The results revealed a 10% increase in revenue and audience growth across out-of-home formats.
- oOh! delivered revenue of $276.1m in the reporting period ending 30 June.
- Adjusted underlying EBITDA increased by 62% on the prior corresponding period to $51.5m, reflecting a strong operating leverage.
- oOh!’s financial position continued to strengthen during the period with a 37% decline in net debt. Net debt at 30 June 2022 sat at $39.8m compared to $63.5m at 31 December 2021.
- ooh!media shares are trading on the ASX at $A1.44 with a market capitalisation of $A862 million.
Nine Entertainment Co.:
- Nine’s stellar performance in its FY earnings yesterday, which saw the network report their highest ever group EBITDA, generated controversy and drew ire given that the business announced regional layoffs just last month.
- Nine reported net profit after tax of $315 million, in addition to strengthened audience numbers across its key platforms.
- Group EBITDA of $701 million equated to growth of 24%, ahead of first half growth of 15%, and slightly ahead of the `more than 22%’ guidance given in February.
- EBITDA was up 24% on the previous corresponding period, reflecting the continued momentum of FY21.
- NEC shares are currently trading at $A2.18, with a market capitalisation of $A3.72B.
- The company also announced increased dividends, and a share buyback for as much as 10 per cent of Nine stock.
- Yesterday, Nine shares ended 9% higher at $A2.18 on the ASX.
HT&E:
- HT&E reported satisfactory results in its HY22 earnings last week – increased group radio revenues of 7% and 11% growth of EBITDA.
- ARN, owned by parent company HT&E, reported strong performances and high confidence leading into H2.
- HT&E’s earnings report showed ARN Regional radio revenues up 11%, and EBITDA up 21%.
- In H2, ARN CEO Ciaran Davis said “We’re increasing our investment into podcasting, new content creation, new episodes – that’s the bulk of the $9-10 million that we’ve spent this year in terms of digital audio investment. Digital audio is where we will continue to focus our investment.”
- HT&E is trading at $A1.34 on the ASX today, with a market capitalisation of $A418.42 million.