Nine reports advertising rebound and moves Stan deeper into sport

Nine has seen a faster-than-expected pick-up in advertising spending in recent months.

Nine Entertainment chief executive Hugh Marks. Picture: Adam Yip

Nine Entertainment has seen a pick-up in advertising spending in recent months as the media group continues to overhaul its Stan streaming business, which will move deeper into sports after picking up broadcast rights to Wimbledon and the French Open.

The company, born out of a $4bn merger with Fairfax Media nearly two years ago, said the ad rebound was set to deliver growth of around 15 per cent in metropolitan free-to-air TV ad revenue for the three months to December.

That compares to a 15 per cent drop in the first quarter of the 2021 financial year.

The improving television ad market, coupled with a boost from the delay of the State of Origin and NRL finals this year because of the coronavirus crisis, will lift Nine’s interim underlying earnings by 30 per cent to around $326m from $251m a year earlier.

Nine chief executive Hugh Marks said the underlying ad market had “markedly improved” since its update in August.

“It certainly came back quicker than what we anticipated, and it seems that it’s pretty broad-based,” Mr Marks told reporters after Nine’s first virtual annual shareholder meeting.

Mr Marks said companies had increased their marketing budgets to “position themselves out of COVID”, adding that the early beneficiaries were TV network’s broadcast video-on-demand services.

Nine has forecast that its BVOD platform, 9Now, will book a 25 per cent jump in first-half revenue from a year ago.

However, Nine’s first-half metro TV ad revenue will be broadly flat from a year earlier after the poor start to the 2021 financial year as companies slashed ad spending during the coronavirus crisis.

Mr Marks said Nine’s TV costs would be down in the “double digits” in the first half to December. But he forecast a rise in the last six months of the financial year as a result of the return of the NRL and “some reinvestment in content to support the continued recovery of advertising markets”.

The company also reaffirmed that it remains in cost-cutting mode, slashing around $230m from its broadcast and publishing operations by the 2024 financial year after recently moving its TV and newspaper operations to its new headquarters in North Sydney.

Nine said it couldn’t provide annual earnings guidance, citing limited visibility on the ad market in the second half of 2021 financial year.

In a separate announcement, Nine and Stan announced they had bought the international broadcast rights to Wimbledon and the French Open for an undisclosed sum, just days after splashing out $100m for rugby rights as part of plans to feature sport on Stan for the first time from next year.