Advertising revenue tumbles at Nine Entertainment

Nine Entertainment has forecast a 15 per cent decline in the free-to-air television market for the final quarter, with the slump in TV advertising likely to bleed into the next financial year.

Nine Entertainment chief executive officer Mike Sneesby.

Nine Entertainment has forecast a 15 per cent decline in the free-to-air television market for the final quarter, with the slump in TV advertising likely to bleed into the next financial year.

In a trading update posted on the ASX on Wednesday morning, Nine chief executive officer Mike Sneesby said the market’s sluggish advertising cycle was the by-product of a weak economy, and the ongoing uncertainty means the industry has “limited visibility” of a rebound.

“Consistent with our commentary in February, the metro FTA market declined by around 15 per cent in Q3 (on Q3 FY22), with a similar decline expected in Q4 (on Q4 FY22), albeit the market remains short, with limited visibility,” he said in his trading note, ahead of his appearance at the Macquarie Australia Conference on Thursday.

“The absence of key events, particularly the 2022 federal election, accounted for an estimated six per cent of this decline.

“Total television costs are expected to increase in the low single digits in the second half, resulting in FY23 total television cost growth of slightly below seven per pent, as per the February guidance.”

Seven West CEO James Warburton. Picture: Britta Campion

Nine has made some significant outlays this year, most notably its successful $315m, 10-year bid for the rights to the Summer and Winter Olympic Games through to and including Brisbane 2032.

But Mr Sneesby said Nine remains in “an incredibly strong position”.

“Our business has embraced the opportunities of digital, extending Nine’s content across the evolving digital platforms,” he said.

Mr Sneesby’s concessions on costs and advertising revenue followed similar remarks by his counterpart at Seven West Media, James Warburton, on Tuesday.

“We believe that the market will be down in total television circa 11 per cent for the third quarter of FY2023,’’ Mr Warburton told the Macquarie Conference. ‘‘The market is still being relatively short and trending in a similar fashion … we could expect that to continue through the rest of the second half.’’

The Seven CEO said the Kerry Stokes-controlled media company intends to cut up to a further $20m in costs to cushion the decline in advertising revenue, however he remained bullish about the prospects of a strong industry bounce-back.

Mr Warburton also said advertising on Seven’s BVOD (broadcast video-on-demand) platforms was enjoying double-digit growth — a trend that he expects to continue.

Seven West Media’s share price closed at 38c on Wednesday, down by 1.28 per cent. Nine shares were steady at $2.03.