Industry abuzz Nine Entertainment has had informal talks with QMS

Nine denies it’s had discussions with QMS about a potential deal.

Could Nine Entertainment be in talks to buy outdoor advertiser QMS?

There is some chatter in the market that the pair have had some discussions of late about a possible deal.

Nine says there’s “definitely nothing to it” and QMS owner Quadrant has hosed it down but others are convinced that the pair have at least spoken about the opportunity.

No doubt fuelling the speculation was the appearance of Nine boss Mike Sneesby at the recent QMS party for its City of Sydney outdoor advertising contract.

Nine’s streaming service, Stan, is a big QMS advertiser, so on the face of it there’s not too much that can be read into that.

QMS’ owner, Quadrant Private Equity, has been trying for some time to convince Nine to buy its business if you believe the talk in the market – and sources say that QMS has recently been shopped around. But it would be a big call for Nine to buy QMS.

The higher interest rate environment puts pressure on discretionary spending, potentially creating a hit to Stan.

Should Nine make an acquisition, certain sources believe it would likely be in the digital space, rather than a business offering traditional media.

And outdoor advertisers are in for a tough time too, as they face high construction costs after two years of very little business during the height of the global pandemic.

Yet the $3.7bn Nine, which owns print, radio free-to-air television as well as digital media assets, is cashed up.

It generated a 71 per cent increase in net profit for the year to June to $315.3m.

Its net debt is $324.4m, which equals close to 0.5 times its leverage to earnings before interest, tax, depreciation and amortisation, of $700.7m.

Also, some believe that the price tag for QMS may be only about $100m but Quadrant denies this, saying it is set to generate about $80m in annual earnings after it agreed to purchase the company im 2019 for $572m.

Stan is making about $28.5m but was previously predicted by former boss Hugh Marks to make about $100m in EBITDA, so it may be keen to find a new business on which to place its bets.

Nine had the opportunity to buy the $784m outdoor advertiser oOh!Media before it listed in 2014 at about $289m and many believe that it was a missed opportunity, given that it would have completed its suite of media offerings for advertisers.

And sources believe that oOh! Media is constantly under Nine’s watch.