Stan a winner for Nine as softer economy stings ad market

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Nine Entertainment boss Mike Sneesby says its streaming platform Stan is ready to capitalise on the shifts in the global streaming market, after increasing commissions of local content and bumping up investment in sport.

Stan was the strongest performer in the company’s full-year results on Thursday, which saw Nine post a drop in full-year profit as the economic slowdown took a toll on advertising demand across its divisions.

Nine chief executive Mike Sneesby said the company’s TV business had an extraordinary year, gaining market share.Credit: James Brickwood

With the total number of users for Stan coming in at 2.6 million, Sneesby said on Thursday the service isn’t as exposed to the same pressures facing its competitors, which are burning cash even as more subscribers start cutting back on streaming services. The lengthy strikes in Hollywood have further added to the headaches of the streaming companies.

“Those platforms who are international and relying on content coming out of the US market, are now under pressure in terms of content supply,” Sneesby said.

He added that some global streamers could move back towards a hybrid or licensing models, which could lead to previously exclusive content deals being made available more widely in the future.

Nine lost out on a valuable NBCUniversal content deal in 2022, prompting the company to shift its focus to self-commissioning and owning shows, giving it more control over content.

“That is a real opportunity for Stan in terms of increasing the availability of licensed content that comes into the market, which is great for us to have optionality around what we might acquire.”

Nine on Thursday posted a 38 per cent fall in net profit to $195 million, weighed down by an $85 million charge to write down the value of radio licences and other assets, with revenue for the period holding steady at $2.7 billion.

Full-year operating earnings before the one-off charges dropped 16 per cent to $591.2 million, in line with management forecasts.

Despite an 11 per cent increase in costs, earnings at Stan rose by 30 per cent to $37.1 million, with revenue also up 12 per cent to $427.6 million, which Sneesby said was evidence the company’s strategy was “paying off and working well”.

While below last year’s earnings, the media conglomerate pointed out that the result, excluding the one-off charges, was the second-strongest since relisting its shares on the ASX in 2013.

Chairman Peter Costello said that while the company faced tougher economic conditions, which have hit the entire media industry, Nine had “risen to the challenge” by continuing to drive audience and revenue share.

Nine’s advertising-reliant assets in publishing, television and radio were challenged due to a subdued market.

“Against this backdrop, Nine has continued to outperform in each of its operating segments,” the company said, with Sneesby noting that the first two months of the 2023-24 financial year had continued to be subdued.

Nine is the owner of this masthead. It also owns The Australian Financial Review, as well as the Nine Network, radio stations including 3AW and 2GB, subscription streaming platform Stan and broadcast video on-demand platform 9Now.

Revenue in Nine’s broadcast business fell by 1 per cent to $1.36 million, with costs rising 7 per cent and earnings before interest, tax, depreciation and amortisation (EBITDA) falling 20 per cent to $319.5 million, down on last year’s figures, but above pre-COVID levels, the company said.

Similarly to Seven West Media last week, its results were impacted by a struggling metro free-to-air advertising market, which declined 11 per cent year-on-year, and 15 per cent in the June half, Nine said.

Publishing revenues declined by 3 per cent to $575.2 million, with earnings down 8 per cent to $164.7 million, also due to a softer ad market, Nine said. Total subscription revenue grew by 3 per cent, with more than 460,000 active subscribers now across The Sydney Morning Herald, The Age and The Australian Financial Review.

Stan Sport and Nine will broadcast the Rugby World Cup next month.Credit: Getty

After Seven chief executive, James Warburton said Nine will incur “substantial losses” with its Olympics broadcast during his company’s results presentation last week, Sneesby responded by saying the company “looks at the partnership through a very different lens”.

Nine landed a decade-long deal with the International Olympic Committee worth more than $300 million. “There is no media company in Australia that has the breadth of assets that we have for the distribution of the Olympics and the Paralympic games,” Sneesby said.

He said the agreement allows Nine to distribute and commercialise the content across all of its platforms, creating a vastly different revenue equation to previous Olympics broadcast deals.

The results come amid a grim reporting period for Australia’s media companies. Radio-heavy ARN Media, which also delivered its half-year results on Thursday, saw its revenue fall 4 per cent and net profit excluding significant items slump 40 per cent.

Its chairman Hamish McLennan said radio advertising sales had been hit by reduced consumer spending and a slowing of the economy.

Meanwhile, full-year profits at Seven West Media fell by 18.2 per cent and 20.1 per cent at Southern Cross Austereo.

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