Nine Entertainment plans $100m in cuts as free to air struggles
Big, one-off sporting events and international programming are in Nine’s sights as the broadcaster tries to find $100m in cost cuts.
Nine Entertainment has outlined plans for $100m in cost cuts from its free-to-air broadcast business over the next three years, as the advertising downturn hits its Channel 9 broadcasting business.
The media company, born from Nine’s $4bn merger with Fairfax Media in December 2018, said advertising market conditions were “softer than expected” for the start of 2020.
The comments came after Nine posted a 41 per cent drop in interim profit to $101.9m. This result included $75.2m in writedowns and stripped out earnings from businesses sold (including regional newspapers) over the past year.
Chief executive Hugh Marks said the group’s TV cost cutting drive would target international content, which costs its free-to-air business “north of $100m” each year, plus one-off sports rights for events such as the Ashes and the Cricket World Cup.
“While we got great ratings if I look at our revenue at the end of the day, you have to really question whether those one-off sports events are able to be realised into a revenue proposition on a consistent basis in FTA going forward,” he told investors on the group’s earnings call.
“It’s a pretty big area where we spend quite a bit of money, and that’s another area that we need to target.”
Mr Marks said it will also review the overall business needs as it prepares to move to its new headquarters in North Sydney, “and that’s before we even start to think about sales costs.
“We remain focused on investing in the content that drives revenue outcomes, domestic local content, news and current affairs, regular sport. So I anticipate in that cost out that none of those areas are impacted, and that I think is a big opportunity for us as we go into this next period of growth for Nine.”
Nine’s broadcasting earnings were down 29 per cent over the half to $136.3m, while digital and publishing earnings were up 7 per cent to $46.7m
Nine has forecast full-year underlying earnings to come in at a “similar level” to last year’s $423.8m.
Nine’s free-to-air television network reported a 36 per cent drop in underlying earnings to $103.5m, while its radio business booked a 63 per cent drop to $5.7m.
Nine’s streaming business Stan booked earnings of $13.5m, driven by a 79 per cent jump in revenue, despite costs rising 18 per cents. That compares to an earnings loss of $21.8m in the first-half of 2019 financial year.
Nine said the current momentum is expected to continue at Stan, “albeit at a slower rate as last year’s price increase and strong subscriber growth of 2019 is cycled”. Stan currently has 1.8m subscribers.
Nine will pay an interim dividend of 5c a share to shareholders, flat from last year.
Nine shares jumped 9 per cent to $1.77 just before lunch on Wednesday after dropping 3.9 per cent on Tuesday.
More Coverage
BBC apologises to staff over Russell Brand sex complaints
Some employees had stayed silent about the behaviour of the comedian and actor because they believed he ‘would always get his way’, a BBC director said.
Questions about ABC platforming ‘radical fringe Jewish voice’
Jewish groups have questioned why the national broadcaster has chosen to platform and ‘mainstream’ a Jewish ‘radical fringe voice’, in its coverage of anti-Semitic events in Sydney.