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Nine Entertainment Co. FY20 Interim Results

Nine Entertainment Co. (ASX: NEC) has released its H1 FY20 results for the 6 months to December 2019.

On a Statutory basis, pre Specific Items, on Revenue of $1.2b, Nine reported Group EBITDA of $251m, and a Net Profit After Tax of $114m. Post Specific Items, the Statutory Net Profit was $102m. These numbers are stated excluding Discontinued Businesses.

On a pre AASB16 and Specific Item basis, Nine reported Group EBITDA of $231m, down 8% on the Pro Forma results in H1 FY19 for its Continuing Businesses. On the same basis, Net Profit After Tax and Minority Interests was $115m, down 9%.

Key takeaways include:

  • Strong growth from digital video businesses
  • $35m EBITDA improvement at Stan1, with subscribers exceeding 1.8m
  • 65% growth in EBITDA at 9Now1, with market leading BVOD share of ~50%
  • Further investment in 9Now to accelerate growth into the broader digital video market
  • Result was heavily impacted by challenging cycles
  • Broad based ad market weakness including a 7% decline in Metro FTA revenues
  • Housing market softness impacting Domain’s residential listing volumes
  • Stability in Metro Media earnings1
  • Synergies of $9m identified following completion of the Macquarie Media acquisition
  • Nine expects FY20 EBITDA at a similar level to FY191
  • 1 like-basis, pre AASB16

Hugh Marks, Chief Executive Officer of Nine Entertainment Co. said: “This result is a testament to the work we have done over the last four years to reposition Nine for a digital future. With strong growth in our digital businesses helping to offset some of the cyclical headwinds faced by our traditional media assets.

“We have now clearly established Nine as the leading domestic player in the digital video market with both 9Now and Stan recording very strong growth in the period. Growth that we expect to continue into H2. We have successfully unified our first party database across all of our owned and controlled businesses, meaning we are in a position to offer our partners the benefits of more targeted advertising across the Nine suite of assets.

“We have invested in technology through 9Galaxy which will enable our inventory to be traded seamlessly, and in a premium content mix that works across linear and on-demand television. Positioning us to compete more effectively with the global technology companies for revenue.

“Recognising this company-wide evolution, we believe there is significant potential to refocus the cost structure of our FTA business, targeting the removal of up to $100m in annualized costs over the next 3 years – costs that will not inhibit our ability to continue to invest in the growth opportunities around premium revenue and digital video, as we have done successfully over the past 3 years.

“Nine is in a unique, and incredibly exciting position. We own platforms across linear television, digital, print and radio – leading assets, and all of which are evolving towards digital distribution. Almost 40% of our earnings are now sourced from growing digital platforms. Together with data and technology, we have the ability to distribute messages to mass audiences as well as to small but valuable, addressable audiences. We have the systems to ensure seamless and efficient delivery for advertisers and we have the balance sheet to invest in the content that works for Australians.”


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