Nine Entertainment Co. has released its financial results for 2022 with the media conglomerate revealing record results for FY22.
Key takeaways from the report include:
• Market leading revenue share in BVOD and linear (notwithstanding two Olympics and an Ashes series broadcast on competing networks) fortified Total Television EBITDA growth of 19%
• 33% growth of full-year dividend to 7.0 cents per share
• 81% growth in profit increase on the previous year
• Total Television business leading the calendar year in broadcast ratings
• 22% revenue growth at streaming platform Stan and growth of active Stan subscribers
• Biggest ever audience reach of talk stations, with more than 2 million weekly listeners
• Content and programming strategy continuing to deliver audience strength across key platforms
Nine Entertainment Co. leads broadcast ratings
Nine’s Total Television business is the top dog to date for the calendar year in broadcast ratings, with EBITDA of $101m growing by 37% on FY21 and contributing to more than 25% of Total Television profitability. Driven by a record-breaking State of Origin series and a hugely successful Australian Open, Nine recorded a peak audience of 4.261 million viewers who tuned in for the Women’s Singles Australian Open Final which saw Australian and former World No.1 Ash Barty claim the win.
Across the financial year to June 2022, Nine brought in a commercial network share of 38.4% and a primary channel share of 39.7% of the 25-54 demographic, which saw Nine taking the spot as the number one network for all key demographics.
EBITDA of the group equated to $701m, recording a growth of 24%, an increase on the first half rise of 15%.
A Digital Domain
With streaming and digital platforms now foundational to broadcasters and delivery of content, Nine’s digital platform 9Now recorded strong growth, with a revenue increase of 41%. Nine’s streaming service Stan retained its spot as the leader of local Australian streaming with a 6% increase year-on-year of active subscribers.
With Stan’s focus on original Australian content and live sport, Stan grew its slate to 9 originals, all launching with strong results, driven largely by the film Gold, starring internationally renowned actor Zac Efron (Extremely Wicked, Shockingly Evil and Vile). Strong originals from Stan also included The Tourist (co-produced with BBC and HBO Max) starring Jamie Dornan (The Fall, 50 Shades of Grey), Wolf Like Me (co-produced with Peacock) starring Isla Fisher (Confessions of a Shopaholic) and Josh Gad (Frozen). Stan is slated to further grow its catalogue of original content, with 20 new commitments slated for release in FY23.
Digital subscribers are a key driver of growth for Nine, with active subscribers of Nine’s mastheads The Sydney Morning Herald, The Age and The Australian Financial Review increasing by 66% across the year. This increase resulted in double-digit growth in revenue from subscriptions along with revenue from digital platforms.
For every action, there is an equal but opposite reaction, with the sharp rise in digital subscriptions resulting in a decrease in print subscriptions and a retail sales fall of 6% as readers continue to shift to digital platforms for news.
As the digital audience and readership grow, so too does Nine’s digital advertising. Digital ad revenue grew by 10%, despite the end of the legacy Google sales agreement in February 2021.
Publishing Pundits
The publishing division of Nine includes the core Metro Media business, along with nine.com.au, Pedestrian Group and Drive. The combined revenue of $594m and EBITDA of $180m were reported from the publishing division, resulting in a 53% increase in revenue from FY21. In total, the publishing revenue is made up of 60% of digital revenue.
Though print sales of Nine’s mastheads declined by 6%, strong readership of the digital mastheads of The Sydney Morning Herald, The Age and The Australian Financial Review saw strong subscriber growth and a healthy increase in advertising revenue for Nine’s publishing assets. Digital advertising shot up by 10%, while print advertising grew by 13% despite the recorded fall in print sales.
Overall, publishing EBITDA increased to ~$180m for the year, with a publishing cost increase of 7%, with roughly half of the increase attributed to a growth in numbers of staff and production costs.
ASX Performance
Net debt of Nine sits at $173m as of June 30 2022, with the company planning to pay its final dividend of 7.0 cents per share in October 2022.
Due to the strong FY22 results, the board of directors is continuing to centre their focus on active capital management, with it today announcing its intention to conduct a buy-back scheme of up to 10% of its shared capital.
Peter Costello, chairman of Nine said of the buy-back initiative: “This initiative reflects the Company’s strong performance and balance sheet, and leaves Nine with capacity to maintain a dividend payout ratio of c60-80% through the cycle, as well as further invest in strategic growth opportunities (organic and inorganic).”
While the standing of the global economy has been in flux for most of the calendar year, the new financial year has shown a resilient advertising market, with Nine saying it is confident the diversification of its earnings profile will ensure ongoing record profit performance.
Nine comments
Not immune to the pressures of cost of living rises and the unforeseen financial strains the invasion of Ukraine placed on businesses globally, Chief Executive Officer of Nine, Mike Sneesby commented on the company’s ability to adapt: “Whilst broader economic factors are beginning to impact some areas of the market, Nine’s strong competitive position and balance sheet stands us in good stead. We have successfully diversified our earnings base, with more than 30% of our revenue now from subscription and licensing.
“With strong results, Nine is looking to capitalize on the strategies that brought these wins. Sneesby said in a statement regarding the results: “Our task now is to harness this passion and define what our broader Purpose, Vision and Values are at Nine. This work has been playing out over the past nine months, and it’s been inspiring to see so many of you get involved in the conversation, telling us you believe Nine plays a crucial role in informing the nation, finding and telling the stories that matter, holding power to account, and entertaining our diverse audiences. This is all part of our DNA; all part of who we are at Nine, and why we can consistently deliver success for our shareholders, our audiences, and the wider community.
“Sitting behind these results are some exceptional achievements. Our Total Television business leads the calendar year in broadcast ratings, BVOD streaming, and revenue. This has been driven by an amazing Australian Open and record-breaking State of Origin series, plus Logie award-winning Lego Masters and Travel Guides, and well-loved shows like Married at First Sight and The Block – now in its 18th season and still delivering first night numbers up almost 22%, including almost 60% growth in live streaming on 9Now (which grew live streams overall by 50% this year).
“There have been wins across all of our radio markets, which have seen an incredible profit increase of 81% on last year. And just this week Nine’s talk stations achieved their biggest ever audience, with Survey 5 showing more than two million listeners now tune in each week.
“Our metro mastheads, The Sydney Morning Herald, The Age and The Australian Financial Review have all continued to add subscribers, increase advertising revenue, and remain the standard for print journalism in Australia.
“Investment in Sport, Events and Originals also continues at Stan – which remains Australia’s leading local streaming service. This strategy has continued to grow subscribers and build a stronger, more differentiated and valuable business for the future.
“Results like these can only be achieved by an organisation that’s passionate about the quality, power and purpose of what it delivers. At Nine, we have this in spades. It’s key to the ongoing strength of our business and financial performance, and has also meant the Board and Executive Team were able to say ‘thank you’ this year in the form of a Recognition Bonus.”
For more detail on Nine’s FY22 results you can read the ASX release.