Nine’s new boss faces old challenges, but the rewards are rich

Nine Entertainment has a new contestant in its game of corporate leadership: It’s Matt Stanton, who – having just been appointed chief executive after leading the group in an acting role for the past six months – now gets to pit his skills at saving or even growing the country’s largest media company.

Running Nine is no mean feat. It is a company with assets – particularly traditional broadcast television – that are structurally challenged, whose businesses are competing for revenue against the giant new media platforms like Google, Facebook and TikTok or streamers like Netflix, and whose fortunes rise and fall with the broader advertising market.

As Stanton put it on Thursday: “The external environment for all media companies is tough”.

Matt Stanton has landed the job running Nine Entertainment,Credit: Max Mason-Hubers

The prize money is big if he gets it right. If he hits the earnings jackpot, he could make $6 million a year. That’s rich pickings for running a company capitalised at about $2.5 billion.

His two predecessors, Mike Sneesby and Hugh Marks, made strides, but neither left in a blaze of glory. Marks engineered Nine’s merger with publisher Fairfax, which included this masthead, while Sneesby created and grew its streaming platform, Stan.

At least one major element of Stanton’s legacy will be decided in his first few months on the job. It’s the decision whether to sell or retain Nine’s 60 per cent shareholding in real estate portal Domain – a company capitalised at $2.7 billion that has a larger sharemarket value than Nine itself.

If the barometer of success were purely the share price, Marks would be a winner. But for all the promises of synergies and benefits of cross-fertilisation hailed during the merger of newspaper publisher Fairfax and TV broadcaster Nine more than six years ago, the silos still operate quite independently.

In many respects, the success of any Nine chief executive is determined by the strength or weakness of the broader advertising market – or, in the case of Domain – by the housing market.

The decision on Domain’s future is particularly important because the cash from a sale would provide Nine with options. If part of that is used to pay down debt, it would give the company a robust balance sheet to weather external economic shocks.

It also provides an opportunity to return capital to Nine’s shareholders, which makes the sale option popular with its investors, who will be applying pressure to get an auction going for Domain.

Stanton and the board may prefer to retain Domain for its cash flow, but in the end (just like the decision to sell a house), it will come down to price.

It’s an asset that hasn’t nearly reached its potential – call it a “renovator’s delight”. Where its only real rival, News Corp’s REA Group, is powering along with the lion’s share of the market, Domain is in a pretty poor and distant second – or in real estate parlance, a case of “worst house, great street”.

Given Stanton has been acting chief executive since September and was previously Nine’s head of strategy and finances, he has had time to formulate a plan.

He has already told investors that he has a major initiative to cut costs by $100 million over two years. Shareholders love these kinds of actions, but they can have dangerous consequences in the medium to long term if assets are starved or damaged in the process.

In the end, the mark of a successful chief executive is not how much they cut costs but how they grow revenue.

In a note to staff on Thursday, Stanton declared he had an ambitious transformation agenda to ensure the company was “best positioned for the future”. This involves a reset and reshaping of the business, he said, without giving further details.

It will likely involve better use of analytics gained from more rigorously scraping data from customers across Nine’s publishing arm, digital television, Stan, and (if retained) Domain.

This will allow a better understanding of how to best package paid content to subscribers and target advertising clients.

The job won’t be short on challenges – but if Stanton gets it right, he’ll hit the pay jackpot.

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