Nine’s Stan on track for profit after 50pc HY revenue lift

Nine’s Stan is steaming towards a profit after a 50 per cent jump in first-half revenue.

Andrew Rannells stars as Blair Pfaff in Black Monday, which screens on Stan.

Nine Entertainment has flagged that its streaming video-on demand service Stan will be profitable by June as chief executive Hugh Marks looks to exploit the enlarged media group’s operations.

Mr Marks said Stan’s financial turnaround was due to an increase in subscribers and a price increase last month.

“We’ve actually been increasing our investment in content. We’ve maintained our marketing spend so basically its a combination of growth in subscribers and price,” Mr Marks told The Australian.

Stan, which is now 100 per cent owned by Nine following its $4 billion merger with Fairfax Media in December, recorded a “very strong period for sign-ups” in the first-half to December 31, with active subscribers of around 1.5 million.

With the popularity of streaming content showing no signs of abating, Stan posted a 50 per cent jump in first-half revenue to $65.2 million.

Its earnings loss narrowed to $21.8 million in the six months to December 31 from $29.9 million, with costs up 19 per cent to $87 million as the group added more content to its service.

Stan is expected to report a “positive contribution” to Nine’s underlying earnings in the 2020 financial year.

Nine expects to wrap up the sale of its regional and community newspapers, New Zealand and events businesses inherited from Fairfax by the end of June.

Mr Marks said the sale process of its events business, which produces the popular annual City2Surf running race in Sydney, is “down to the final stages”.

Interested parties are running the numbers over its regional and community newspapers business, Australian Community Media, and New Zealand business Stuff, he said.

“In terms of ACM and New Zealand, interested parties are in due diligence. Subject to receiving I think offers that represent acceptable value for our shareholders, I certainly anticipate seeking to complete that process in this financial year,” Mr Marks told The Australian after reporting first-half earnings growth.

Nine Entertainment CEO Hugh Marks. Picture: John Feder.

ACM is made up of more than 170 regional and community newspapers, including the Illawarra Mercury, The Land, Nyngan Observer, Longreach Leader, Jimboomba Times, Northern Argus and Bunbury Mail.

Nine has tapped local investment bank Macquarie to handle the sale process, which will leave the enlarged group with four key divisions.

“There’ll always be bits and pieces changing in the mix, but basically it’s a four division business, its broadcasting, its Domain, its Stan and it’s the digital and publishing business,” Mr Marks said.

Nine has also flagged that its streaming video-on-demand business Stan will start delivering earnings growth from the fourth quarter, supported by growth in subscribers and a price increase on January 31.

On a pro forma basis, Nine has posted a 6 per cent rise in earnings before interest, tax, depreciation and amortisation of $252 million with profit after tax and minority interests up 5 per cent to $126 million, driven by its vast television operations and “double digit” cost cutting.

However, revenue was down 3 per cent $1.20 billion.

Nine said Stan recorded a “very strong period for sign-ups” in the first-half to December 31, with active subscribers now of around 1.5 million.

Stan posted a 50 per cent jump in first-half revenue to $65.2 million, and a 19 per cent hike in costs to $87 million. Its earnings loss narrowed to $21.8 million from $29.9 million.

The group has also flagged cost savings of $65 million from the merger in the 2020 financial year. For the current 2019 financial year, the group expects to deliver cost saving of $50 million.

Nine declared an interim dividend of 5 cents a share.