Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nine Entertainment Co. Holdings Ltd (ASX:NEC, Financial) reported group revenue of $2.6 billion, with digital revenue growing by around 5% across the 12 months.
- The company achieved significant cost savings, removing around $65 million of costs from the business across the year.
- Stan, the company's streaming service, saw a 24% growth in EBITDA to $46 million, driven by an 8% increase in ARPU and solid subscriber performance.
- The Paris Olympic Games were a major success, with Nine achieving an unprecedented daily national total TV average reach of almost 10 million people and generating over $160 million in revenue from both advertising and subscription.
- Nine's integrated audience platform, leveraging first-party data and AI, has shown strong potential for future growth and competitive advantage.
Negative Points
- The advertising market remained challenging, with a 9% decline in the Total TV ad market, leading to a 10% decline in TV revenue for Nine.
- Meta's decision to disengage has impacted Nine's revenue, particularly in the digital publishing segment.
- Despite cost savings, the company faced ongoing cost efficiency measures due to a difficult operating market.
- There has been public commentary regarding the company's culture and workplace behavior, which Nine is addressing with third-party reviews.
- The company's balance sheet showed an increase in net debt from $339 million to $489 million, partly due to dividends and share buybacks.
Q & A Highlights
Q: Can I clarify what the dollar cost of the Olympics in FY25 will be? Would you expect TV revenues to grow in FY25 excluding the Olympics revenue uplift?
A: While we won't specify the exact costs, we have generated over $140 million in advertising and expect over $160 million in total revenue from advertising and subscriptions. We anticipate slight growth in Total TV revenue even without the Olympics.
Q: Thinking ahead to FY26, how much of each advertising dollar in TV and Publishing would drop through to EBITDA?
A: The majority of the revenue will drop through to EBITDA, especially in TV. In Publishing, there are more costs and commissions, but most of the revenue will still contribute to EBITDA.
Q: Do you think you need to own as much as 60% of Domain? Would there be merit in bringing in a strategic partner?
A: Our conviction in Domain is strong, and we see significant value in our integrated audience platform. We continue to explore options to maximize shareholder value.
Q: Based on your comments around Olympics revenue and prepayments, it sounds like the total Olympics costs would be well over $100 million. Is that a fair estimate?
A: The profitability guidance includes all costs, such as rights fees, production, and team expenses. The prepayments don't necessarily align with P&L, but the profitability factors in all costs.
Q: Stan's revenues were down about 1% in the second half despite a price increase. What were the factors driving this?
A: The seasonality of sports events impacts Stan's revenue. The major difference is the phasing of events and the revenue generated from Stan Sports.
Q: 9Now's growth in the second half was slightly below the BVOD market. Have the pricing issues in the first half been resolved?
A: We introduced seasonal pricing to maximize sell-through. The issues have been resolved, and the strength of audience and agency group deals have increased, particularly with the Olympics.
Q: What dollar value of advertising dollars do you think the Olympics added to the TV market?
A: While it's hard to specify exact numbers, we are confident that the games will be materially profitable, including displaced revenue.
Q: You mentioned growing Total TV revenue in the second half. What's driving that?
A: We expect the free-to-air market to improve and continued growth in BVOD revenue. It's a combination of these factors.
Q: Stan's revenue growth was below ARPU growth. What caused this?
A: The seasonality of the sports package and slower subscriber growth in the second half are the main differences.
Q: Is there any higher revenue involved in the expanded Google deal?
A: The expanded partnership with Google involves broader collaboration across technology, AI applications, and content delivery, but the News Media Bargaining Code agreement remains unchanged.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
