Nine Entertainment Co reports profit of $140m

Nine Ent Co reports profit of $140m: Slow 2015 ratings start, but share has recovered

Nine Entertainment Co has reported the company’s final results for the 2015 financial year (FY15). Full-year results were in line with the guidance given in early June.

Highlights

•  Net profit after tax before specific items declined by 2.9% to $140m compared with the prior year pro forma result
•  Improved Free-To-Air (FTA) share in a declining market:
•  Metro FTA revenue share of 38.9%, up 0.2 pts
•  Metro FTA advertising market down 1.5%
•  Regional FTA markets down 3.2%
•  Slow start to the CY15 ratings year, but momentum improving in July and August
•  Digital transition and evolution continuing with business refocused
•  Solid result for Nine Live, in line with FY14.  Business divested post year end
•  Specific Items, predominantly non-cash intangible asset impairments, reduce reported results
•  Closing Net Debt of $524m (pre Nine Live cash proceeds)
•  Final dividend of 5.0 cents per share, fully franked.  Dividends for the year totalled 9.2 cents per share

David Gyngell (pictured), chief executive officer of Nine Entertainment Co. said:
“In what has been a difficult Free-To-Air advertising market, our June quarter share performance was short of our expectations. However, we are pleased with our improving ratings performance trend over the first couple of months of FY16.

“Our recently announced NRL rights agreement is transformational for Nine. Together with our expectation of improved affiliate terms, the expiry of loss-making international programming commitments, and our industry-leading debt-free balance sheet, we are in a very strong position. We are optimistic about the prospects for Nine as we continue the ongoing integration of our television and digital businesses, focused on monetising the distribution of our premium video content in an evolving world.”

Current trading environment and outlook
The metro FTA advertising market has recorded growth in July which is expected to continue through August, but the market remains very short and monthly outcomes are volatile. Over the year, the market is expected to grow modestly. Regional markets are expected to continue to underperform metro markets.

Nine’s ratings performance has improved markedly since the beginning of July, which is expected to underpin revenue share over the half. However, it is likely that full-year share will be marginally down on that of FY15, given the intensely competitive market, coupled with the timing of certain major events.

Nine remains focused on its operating cost base, and improving its programming efficiencies. In FY16, television programming costs are expected to increase by 2% (prior to the benefit of FY15 inventory provisioning releases). Virtually all of this increase relates to higher contracted NRL and Cricket costs.  Non-programming costs are expected to be flat.

The Digital business is expected to record modest growth despite the transition away from default traffic which benefited the FY15 result for a period.

Source: Nine Entertainment Co

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