What Mike Sneesby must do to succeed at Nine

Mike Sneesby is inheriting a business firing on (almost) all cylinders. But if the incoming Nine Entertainment chief is to succeed at the top of what is now the nation’s largest media company, he will need to overcome some significant strategic challenges.

The tensions on Nine’s board between directors from the former Fairfax Media and those from Nine’s legacy television business exposed in this masthead over the past week have obscured the reality that the 2018 merger between the two companies has been a resounding success.

New Nine CEO Mike Sneesby and Nine Chairman Peter CostelloCredit: Dominic Lorrimer

Nine’s share price touched fresh highs on Wednesday, the company’s market value is comfortably north of $5 billion, meaning more than $1 billion in value has been added since the two historic companies agreed to unite.

The recent share price strength can in part be explained by investors buying stock before next month’s dividend payment. But there is also a growing belief in the market that Nine (owner of this masthead) has a superior collection of assets to its peers and is also well positioned to benefit from rising advertising spending as the economy emerges from the COVID-19 pandemic.

Yet Sneesby, who gave little away about his future plans for the company today, ahead of formally starting in April, will still need to act quickly and decisively to ensure the current operating momentum is maintained.

At the top of his list of challenges will be retaining key staff that have played an integral role in Nine’s current position of strength. Nine’s head of television Michael Healy is highly regarded. Chris Janz, the head of Nine’s publishing division who oversees key product and digital functions and recently orchestrated a lucrative content deal with Google (a similar deal with Facebook is expected to follow), is also considered a key figure. Chief sales officer Michael Stephenson and marketing chief Lizzie Young are other names to watch.

Next on the list will be Domain. Analysts have named underperformance at the real estate listings portal, of which Nine owns 60 per cent, as the biggest risk to the company’s outlook. Domain has failed to meaningfully dent News Corp-owned REA Group’s dominant position in the market. A stunning resurgence in house prices has taken many by surprise, and Domain cannot afford to squander it.

While Nine has a diversified portfolio that is the envy of its rivals, its biggest business remains the one for which it is best known. Broadcast television still accounts for the lion’s share of the company’s revenue and profits. At the moment Nine owns the nation’s top rated network. But Sneesby will need to lock in key content (talks over the renewal of its flagship NRL rights have just kicked off) and on-air talent to ensure it stays that way.

Regardless, the long-term trajectory for traditional television remains daunting.

Sneesby, a voracious consumer of media in “bite-sized pieces”, and mainly on his phone, knows all too well the predicament the traditional medium faces in an era of fragmented audiences, viewing on demand and competition for eyeballs from a vast array of activities.

Nine has strong hedges in place to mitigate the impact of these dynamics - one of which he himself led from the ground up. Stan has established a strong foothold as the second biggest player in the streaming video market in Australia behind Netflix. It is also becoming a key contributor to Nine’s earnings growth.

But it also faces ferocious competition from global streaming giants for both eyeballs and content. After missing out on some key content deals with major Hollywood studios, Stan is pivoting into local productions, and has recently expanded into live sport through the acquisition of rugby union rights.

These moves play to Nine’s historic strengths. But they are not without risk. After a hard fought selection process and tumultuous few months at the company, Sneesby will be up for the challenge.

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