Nine lifts first-half underlying earnings guidance

Nine says underlying earnings are growing faster than earlier predicted as trading conditions improve, particularly in TV.

Nine’s outgoing CEO Hugh Marks, who resigned over a relationship with an office colleague. Picture: Jane Dempster

Nine Entertainment has lifted its first-half underlying earnings guidance in the wake of improving trading conditions, particularly across its television network.

The company expects to report a 40 per cent rise in underlying earnings before specific items to around $351m for the six months to December, compared to last month’s forecast of 30 per cent growth.

For the three months to December, Nine’s metropolitan free-to-air television advertising revenue is forecast to be up “almost 20 per cent”, compared with last month’s guidance of around 15 per cent.

As a result, the group’s metro TV ad revenues in the first-half are now forecast to be up by around 1 per cent from a year earlier.

Nine’s surprise trading update comes a month after chief executive Hugh Marks stunned investors with news he is departing, after his relationship with the company’s former commercial director Alexi Baker was revealed in a Nine newspaper.

Following the publication of the story in the Sydney Morning Herald, Mr Marks quit following an emotional phone hook-up that split the board, chaired by former federal treasurer Peter Costello.

Mr Marks will leave the media group some time by June after more than five years at the helm, giving the company several months to find a replacement.

Two senior Nine Entertainment executives, digital and publishing boss Chris Janz and Stan boss Mike Sneesby, have emerged as the frontrunners to replace the network’s departing boss.

Nine, which also owns newspapers and streaming service Stan, stopped short of issuing annual earnings guidance on Thursday, blaming market uncertainty.

“Nine continues to believe that, given limited visibility of the second half advertising market, it is not in a position to provide guidance on earnings for the full year,” it said.

Nine said expects to be in a “better position” to provide further details at its interim results in February.

Rival Seven West Media last month forecast that its interim TV ad revenue could be down about 5 per cent, citing a “short and volatile” ad market during the coronavirus crisis.

Seven CEO James Warburton told shareholders at its annual meeting that the metropolitan free-to-air TV market was down 5 per cent from July to October from the same period last year.

The group, which is looking to secure a better broadcast deal with Cricket Australia, also declined to provide annual earnings guidance last month.

Nine shares were up 3.8 per cent to $2.44 in early morning trade on the ASX.