Nine’s CEO search continues, as outgoing boss Hugh Marks to stay ‘for now’

Nine reports a lift in first half earnings as media company says the search process for a new chief executive continues.

Outgoing Nine Entertainment chief Hugh Marks. Picture: Adam Yip

Nine Entertainment’s board is still looking for a new chief executive to take over from Hugh Marks, as the media group scrambles to lock in news content deals with tech giants Google and Facebook.

The ongoing CEO search comes as Nine’s television network, which accounted for nearly half of its earnings for the six months to December, is under pressure after its audience for the delayed Australian Open dropped by 32 per cent from last year.

The drop in viewers has already had a knock-on affect on its first-quarter marquee TV show Married At First Sight with its premiere on Monday night down 16 per cent from last year.

Its breakfast show Today, hosted by Karl Stefanovic and Alison Langdon, and evening news program continues to trail behind staunch rival Seven Network.

Nine’s radio business, which consists of Sydney’s 2GB, Melbourne’s 3AW and Brisbane’s 4BC, is struggling as the advertising spending recovery across the radio market lags well behind that of TV.

Mr Marks, who delivered his last set of financial results for Nine on Wednesday, says the Peter Costello-chaired board is “well progressed” in its search to find his successor, more than three months following his shock departure announcement.

“They’ve done a really exhaustive process and they will make an announcement I guess when that process is completed in due course,” Mr Marks said in an investor call, in response to a question about the “deafening” silence on the progress of the CEO search in Nine’s earnings statements.

Mr Marks didn’t provide any further details on the search, but told staff he’ll be sticking around for a while after announcing last November his departure.

“I’ve had a great five years at Nine and I will be around for a while yet as the process continues for the new CEO, and to ensure a smooth handover,” he said in a memo to staff.

The Australian understands it’s a three-horse race for the top job, between Nine executives publishing boss Chris Janz and Stan boss Mike Sneesby, and outsider Carl Fennessy.

At the time of his departure news, Nine said Mr Marks would leave the media group some time by June.

Nine also said it had started talks with Facebook for a deal which will see the technology giant pay for journalism content as part of the Morrison government’s news media bargaining code, which is set to become law by the end of the month.

Mr Marks also confirmed it was talking to Google about a deal, reported by Nine newspapers last week to be worth $30m a year, similar to the one secured by the Kerry Stokes-controlled Seven West Media a few days earlier.

“We will be announcing deals when they are concluded and binding. At this stage we’re still obviously proceeding with negotiations,” Mr Marks said.

Seven on Tuesday night became the first Australian media group to strike a commercial arrangement with Mark Zuckerberg’s Facebook after the US-based heavyweight dropped its ban on Australian news following a flurry of talks with Treasurer Josh Frydenberg.

Nine, born out of a $4bn merger with Fairfax Media in 2018, on Wednesday reported a sharp rebound in ad spending across TV and its broadcast video on demand business 9Now from September following the Covid-19 fallout.

 

Its first-half earnings rose 42 per cent, despite a 2 per cent fall in revenue to $1.16bn.

TV earnings rose 55 per cent to $171.3m, while 9Now reported a 22 per cent lift to $33.2m. However, radio earnings dropped 62 per cent to $2.9m.

Revenue from Nine’s publishing business, which includes The Sydney Morning Herald, The Age and Financial Review, was down 9 per cent, including a 25 per cent drop in print advertising revenue. Still, cost savings and digital sales lift cushioned the fall with earnings for the half increasing 27 per cent to $68.1m

Subscription broadcast sales, which covers Nine’s Stan streaming business delivered first half earnings of $26.5m, up from $14m for the same time a year earlier. Stan currently has 2.3m active subscribers.

Mr Marks said the group has come out on the other side of the Covid pandemic in a very strong operating position”.

“From an advertising perspective, this latest half year was a tale of two quarters. The advertising market clearly turned in late September, earlier and more sharply than we had anticipated, and this was led by television, both free-to-air and BVOD”.

Mr Marks said Nine was well positioned to benefit from this improvement in the ad cycle which has continued into the first quarter of calendar 2021.

Nine’s interim net profit increased 70 per cent to $177.7m, helped by a 13 per cent drop in costs.

Nine also said it will return $2m in JobKeeper funds to the federal government which it received for its events business and news site Pedestrian. Although its majority-owned Domain property listings group will keep its $6m-plus in JobKeeper benefits.

The group will pay an interim dividend of 5c a share, flat from a year earlier.

Nine shares closed 9.7 per cent higher at $2.93 on the ASX.