Slow start to 2016, ad market behind Nine’s annual performance

hugh-marks

Yesterday Nine held its Annual General Meeting at which its largest shareholder Bruce Gordon voted against the network’s remuneration report.

But ultimately it wasn’t enough to deliver a ‘first strike’ against executive pay, according to reports.

The Australian Financial Review notes 21.45 per cent of votes cast were against the remuneration report. To issue a ‘first strike’, a total of 25 per cent of votes needed to be cast against remuneration.

Meanwhile CEO Hugh Marks cited a soft free to air advertising market, and a weaker-than-planned ratings performance as factors hitting its annual results.

“While we worked hard on our cost base, we weren’t able to absorb both impacts, resulting in a disappointing performance at the bottom line.

“As much as our performance in FY16 was impacted by the overall market, it was impact by our own disappointing share. Share is something we can directly control,” he said.

“Nine’s slow start to the 2016 season resulted in a 37 per cent share of metro revenues for the 12 months to June, in line with the guidance we provided in April. Other revenues include those from the NRL simulcast arrangements with Foxtel.”

Chairman Peter Costello said, “Our Free To Air business has successfully overcome a slow start to the 2016 ratings year, with consistent post-Olympic victory across all of its key demographics and the promise of further incremental local premium content for 2017.

“Of course, licence fees remain a key cost of the business. While we welcomed the reduction… our licencing regime remains unfair to Australian broadcasters. Not only does the Australian FTA industry remain liable for [consumption] taxes but of course it has local content and production requirements as well.

“The licencing regime is anachronistic, it was conceived for a media world that has passed and is out of step with arrangements in other comparable markets.”

Acknowledging the 60 Minutes saga, Costello added, “Following this incident, NEC commissioned an extensive independent review of the events leading up to the incident to ascertain what had gone wrong and what should have been done better.

“We have subsequently committed to enhanced processes relating to story selection and approval, how we approve contracts and payments, and the way we conduct risk assessments.”

Hugh Marks told shareholders, “I am confident our reworked content mix and schedule for 2017 will see us lift our performance over what we achieved in 2016.”

The company will also try and cut a further $50 million from operating costs by 2018-19. And it is confident the $36 million invested so far in Stan and its investment in 9Now will deliver results.

Source: B&T, AFR, Fairfax

4 Comments:

  1. Armchair Analyst

    The FTA TV industry needs overhauling at management and investor level! Live content is then future and a better way to monetise without pissing off viewers/consumers will be important! They need to get lazy people out of management and get passionate and innovative people in. They have non of those things! Live Music not XFactor and Sport will be the key! Time shifted stuff can be on catchup or Ott streaming subscription! FTA still has a chance pay TV does not that’s why they r lobbying hard for AntiSiphoning list change!

  2. I heard it said that the claimed demise of free to air TV is premature and overall viewer numbers and revenue is still dominated by the commercial networks. Well if that is the case it is only because some habits are hard to break, especially for older viewers who would not wish to pay for their entertainment, but that does note evade the approaching future where video streaming will be the preference. Nine and others will need to pray that reality TV and News hype shows will continue, their commercial existence will depend on it.

  3. Secret Squïrrel

    “The licencing regime is anachronistic…”
    That’s because it’s licensing an anachronistic distribution method. If a network wants to stream its content via the internet, it still has to pay to use someone else’s cables. No reason why they should expect exclusive use of valuable public RF spectrum for free either.

Leave a Reply

You must be logged in to post a comment.