Nine Entertainment’s full-year results tank as costs soar

Nine Entertainment’s chief executive officer Mike Sneesby has signalled a tough outlook for the business in the 2024 financial year.

Nine Entertainment chief executive Mike Sneesby has signalled a tough outlook for the business in the 2024 financial year as the advertising market suffers from a deteriorating economic outlook and cost pressures plague the company.

Speaking at its annual results on Thursday, the Nine boss said “across all media businesses in the current economic climate … there will be a bit of pressure”.

“Media businesses are cyclical and they ride the highs and lows of that cycle,” he said.

The company’s full-year net profit slumped 38 per cent to $194m, as costs increased and advertising revenue fell, while annual earnings dropped 16 per cent to $591.2m from $700.7m in the previous financial year.

Broadcast costs climbed by 7 per cent to $1.36bn and EBITDA was down 20 per cent to $319.5m.

The metro free-to-air television advertising market fell 11 per cent over the past 12 months.

Nine’s publishing arm, which includes The Sydney Morning Herald, The Age and The Australian Financial Review, was hit by falling advertising revenue, down 16 per cent in the second half of the year.

Publishing revenue was $575.2m, down 4 per cent, while earnings fell 8 per cent to $164.7m.

Mr Sneesby said the publishing team was constantly reviewing the paywalls on its publications, including metropolitans papers where barriers were not as tight.

“We are always looking at opportunities to improve both the consumer experience and the ability to convert our audiences into subscribers on the platform,” he said.

“It is a subject the team in the publishing division are constantly assessing and looking at.”

Mr Sneesby said there was a “generally softer economic environment”.

“The advertising market remained subdued, particularly in free-to-air, digital display and print publishing,” he said.

“Nine has implemented a range of cost initiatives across total television which are now expected to enable us to absorb inflationary costs as well as ongoing investment in technology.”

He said every one of the company’s business units had diversified its revenue streams to cope with economic pressures.

Nine Entertainment chairman Peter Costello.

E&P Capital analysts noted “the outlook for subdued ad market conditions to continue” along with a slight miss to consensus in FY23.

Nine’s streaming service Stan, which has almost 2.6 million subscribers – 2.2 million of them paying subscribers – had a 12 per cent increase in revenue, climbing to $427.6m, and costs rose to $390.5m, up 11 per cent, due to increased investment in Stan Sport.

The global streaming market faces numerous challenges, according to the Nine chief.

“There’s a lot of international content companies that have direct-to-consumer strategies and are being a lot more careful about the markets in which they invest and how they approach those markets,” Mr Sneesby said.

“In some cases they will see that it will be difficult to reach a scale where they can make a direct-to-consumer business profitable and in fact the traditional licensing model that they’ve operated under or the hybrid will make more sense. That’s the dynamic that’s playing out in the market, both globally and here in Australia.”

Mr Sneesby said he expected Nine’s radio arm to continue to see advertising fall by “low single digits” in the first quarter of the 23-24 financial year.

He also said the company remained focused on three key pillars: “community, company and climate”, which includes measuring “our corporate greenhouse gas footprint”.

He would not comment specifically on whether Nine was interested in the next soccer World Cup broadcast rights.

FIFA began meeting with Australian television networks this month to discuss the rights.

The company’s chief financial officer Maria Phillips made a sudden departure from the media company just three weeks ago.

Matt Stanton has taken up a new role as chief financial and strategy officer. The annual dividend was 11c. Its shares rose 0.5 per cent or 1c to $2.04.