Nine has pledged to return Nine’s $2m JobKeeper allowance for its wholly-owned businesses, to the Federal Government as it reports a net profit of $182m for the six months to December 2020.
Nine reported a 42% increase on last year in EBITDA of $355 million and a total revenue of $1.16 billion for the December half year.
CEO Hugh Marks delivered his final results today ahead of his departure, expected by mid year.
“Our business has performed incredibly well through this period of heightened volatility, and has come out the other side in a very strong operating position,” he said. “We acted swiftly when circumstances changed, whilst continuing to embrace opportunity and remain true to our vision – of building Australia’s leading cross-platform media business. In these latest six months, the combined contribution from Stan and 9Now, and the digital components of Domain and Publishing grew by 53% to more than $140m, and, notwithstanding the strong recovery in earnings from our traditional markets, equated to 41% of our total EBITDA.
“From an advertising perspective, this latest half year was a tale of two quarters. The advertising market clearly turned in late September, earlier and more sharply than we had anticipated, and this was led by Television, both Free To Air and BVOD. The brand-building strength of these segments underpinned clear growth in market share overall for the Television industry, that has continued into the first quarter of 2021. Nine’s consistently strong audience performance, across all of our platforms, means we are well positioned to benefit from this improvement in the ad cycle.
“The lessons we have learned from COVID are clear. Our focus on strict cost efficiency at our traditional media assets delivered the profitability we were targeting. And continued investment in our digital businesses is delivering strong digital profit growth. Together, enabling us to continue to migrate the business to a more flexible, digital-base.”
“Moreover, the accelerated growth in businesses like Stan and 9Now, as well as our digital publishing mastheads, has enabled us to bring forward our longer term plans. And importantly has enhanced our competitive position across all segments. This will enable us to continue to invest in our audiences to ensure continued growth into the future.
“I’ve had a great five years at Nine, and am confident that I am handing over the reins at the perfect time – of a business which is clearly firing on all cylinders, but that has plenty of scope to accelerate its profitability in the coming few years.”
Nine’s Broadcast division comprises Nine Network (FTA), 9Now as well as Nine Radio. Together, Broadcast reported EBITDA of $207m on revenues of $622m for the half. Nine Network reported a revenue decline of 2%, or $8m for the half. After a September quarter decline of 14.3%1 , the Metro Free To Air ad market grew by 16.6%1 in the December quarter, combining for growth of 0.6% across the half. Nine’s Metro FTA revenue share of 38.6%1was broadly flat on pcp. For Ratings Season 2020, Nine was the #1 Network and Primary Channel in all key demographics. Nine attracted a commercial network share of 37.5%2 of the 25-54 demographic, 4.7 points ahead of its nearest competitor. On a primary channel basis, Nine’s share of the 25-54s was 38.3%2 , and 6.1 share points ahead of its nearest competitor. In the December half, Nine also won all of the key demographics.
FTA costs declined by 16%, or ~$70m. There were both cyclical and structural elements to the cost decline, which was partially offset by a close to $10m increase in revenue-related costs, given the stronger market.
For the half, FTA EBITDA increased by 55%, to $171m, with the associated margin of almost 33% being the highest achieved since Nine listed in 2013.
The BVOD market grew by 44% for the half to $123m3, with both quarters showing clear growth (+41% in Q1 and 48% in Q2). 9Now recorded revenue growth of 30%, equating to share of ~45%.
Nine’s investment in incremental content helped to broaden usage, with Daily Active Users up 8% across the period, notwithstanding the absence of Love Island (which contributed as much as half the VOD minutes in the months it played). Live and VOD minutes streamed increased by 24% across the half on pcp. Overall, 9Now increased its EBITDA contribution by 22% to $33m.
During the half, Stan consolidated on the subscriber gains of FY20, with the strong summer period resulting in current active subscribers of 2.3m. Across the half, Stan sourced content from 18 different distributors. Particularly popular were Sky Original Gangs of London, the Bryan Cranston series Your Honour (CBS Showtime), the reboot of Saved By The Bell (NBC Universal), the hit new UK drama series It’s a Sin (All3 Media), Clarice (MGM) and Stan Originals A Sunburnt Christmas and more recently Bump, which was released on January 1 and has quickly become Stan’s most successful show of all time. Across the half, total streams increased by almost 20%.
The higher subscriber base going into this half, coupled with the September price increase (premium plan subscribers from $17 to $19) underpinned the reported 28% growth in revenues. Costs increased by 10% (split fairly equally by content and marketing), resulting in an EBITDA more than doubling to $37m.
The strong subscriber growth of the past 12 months has enabled Stan to expedite previous growth ambitions. During the half, Stan announced a long-term content deal with NBCU, the launch of Stan Sports as well as an increased commitment to Stan Originals. Already, Stan has a strong market position and significant EBITDA and cash profitability. There remains substantial upside in both subscribers and profitability for Stan on a longer-term basis.