“Our business is in strong financial shape as we move into a long-term growth phase”
Coinciding with the first half results today, Nine CEO Hugh Marks had an upbeat message sent to all staff:
This morning we updated the market on our results for the first half of the 2018-19 financial year. As you are no doubt aware, these are our first financial results since the merger and I’m pleased to say that in a challenging advertising market our revenue has remained stable and we have lifted our profitability.
The merger has fundamentally changed our revenue profile. A year ago, in our half-yearly results, 86% of Nine’s revenue came from broadcasting. Today that figure is 54%. Why is that important? Not because broadcast won’t continue to be the great business it is today, but because we’ve invested in a broader business that as a whole will grow. Using the breadth and reach of broadcast to help grow our other businesses. Investing for the future in the content mix that will retain our fundamental connection with audiences. Enhancing the digital profile of our business for the future.
I would like to draw out a few key highlights from across various parts of the business:
• In our television business we have achieved a 39.3% share of revenue for the half, a fantastic result for both the content and sales teams, especially absent the cricket.
• 9Now has achieved 50% revenue growth and continues to be a dominant force in the Australian broadcast video on demand (BVOD) space with 47.5% market share.
• Metro publishing has had an amazing half: increasing readership and lifting revenue and EBITA from $25 million in H1 2018 to $39.5 million in H1 2019, a result which shows how well this part of the business is performing.
• Domain has achieved impressive yield growth in a challenged listings environment. Achieving a pretty much flat result in a cyclically tough market, which is impressive.
• Driven by new Australian content and strong summer programming, Stan has reached an important milestone of about 1.5 million active subscribers and we expect it to be profitable from Q4 of FY19.
More broadly, on behalf of the executive team and myself, let me thank all of you for your hard work over the past few months, especially in the wake of the merger. I know many of you have worked hard to ensure that we did not miss a beat, and I hope you can see by this result that our business is in strong financial shape as we move into a long-term growth phase.
Nine today is a media business with a number of key media investments (across television, publishing, streaming and classifieds), which are working and will continue to work closely together and add value to each other. At their heart, most of these businesses have one simple mission: to create great content (be it entertainment or journalism), to distribute it broadly, and to engage audiences and advertisers.
You can see the results of this in a variety of recent examples across the business: the fantastic coverage by Wide World of Sports of the 2019 Australian Open; the stellar ratings for Married at First Sight, which has captured the national water cooler conversation; and in the publishing business where The Sydney Morning Herald and The Age have recently launched a new subscriber drive (which you can see today in the streets of Sydney and Melbourne) built around the power of their journalism, using the marketing line “You Deserve To Know”. It comes after a strong January, which saw the highest uptake of new digital subscriptions for those publications on record.
The coming months will see further changes to our business as we look to divest certain assets, such as Australian Community Media, Stuff NZ and Events. Let me again reassure employees in those businesses. We are talking to interested parties who see the future potential of each one, who are prepared to invest, to realise the potential in a way that Nine could not, due to limitations as a public company. This will help to set each of those businesses up for their next cycle.
Change is a constant in the media business, but as you can see from both our audience and financial results, the merger is already paying dividends and the fundamentals of our business are not only strong but creative, innovative and world class.