Stay tuned
1H23 RESULT
Need To Know
- Nine expects total TV revenue down ‘low to mid-single digits’ in 3Q23
- Stan subs up to 2.6m
- Paid $305m for Olympics rights 2024-2032
- Interim dividend 6cps, payment 20 April
Nine’s improving market share is the good news. A weakening advertising market is the bad news.
Result. 1H23 EBITDA $370.5m was in-line with guidance provided at the December update. The interim dividend of 6cps was down 1cps on last year. Group revenue increased 5.3% with linear TV +2.5%, Stan +12.5%, Publishing flat and Domain +6.4%.
Television. Higher market share helped to offset a -6.4% fall in the linear TV market. Nine lifted its revenue share to 39.6% compared to 36.2% in the prior period although this partly reflected the Olympics on Seven last year. Total TV EBITDA, including 9Now, was down -8% as costs increased 12%. The BVOD market continues to be Nine’s strength as demonstrated by 9Now’s 28% revenue growth, ahead of the BVOD market at 4.6% (again, Olympics effect).
Stan subscriber numbers have increased again although the specific number was not made clear. Around 2.6m subscribers is a good outcome considering the challenges and competition in the streaming market. Stan also put through price increases during the period which supported revenue growth of 12.5%. Stan’s investment in Originals and Sport has clearly been of benefit.
The underappreciated Publishing division held revenue and earnings steady in a softening market.
Investment View
The outlook commentary was mixed with linear TV up against a weak advertising market. The growth in 9Now is keeping things interesting for NEC as it continues the transition to digital TV.
Stan and 9Now provide the basis for valuation upside in NEC, but the share price seems fixated on the old TV channel wars and the fish ‘n chip wrapper Publishing business.
It is fair to look at a weakening advertising market and say there is no earnings catalyst in the near future but accumulating cyclical stocks like NEC when the cycle is at its worst is a good long-term strategy. There is no debt risk at NEC with leverage at 0.5x. A gross dividend yield of 7.9% is appealing too.
Figure 1: 1H23 Result
Stock Overview
Share Price
Company Overview
Nine Entertainment is a media company encompassing television, radio, newspapers, and an array of digital broadcasting assets. It has a 60% stake in Domain Holdings.
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