A tale of two companies today, looking at the contrasting 2015-16 results and outlooks for the next year from the Nine Network and its new regional TV affiliate Southern Cross Austero this morning. Nine’s earnings have headed south, as its “disappointing”ratings performance so far in 2016, weak revenues and one off costs ate into the bottom line. The network had already warned of the likelihood of an earnings slide a few months ago and that is what was unveiled this morning. Profit fell 7% to $120 million with earnings from television down 11% and digital profits up nearly 20%.
Nine’s overall revenue was down 6.5% to $1.282 billion, due to “challenging market conditions in free to air television and refocused digital business”, which is not expected to ease any time soon with Nine saying this morning that management expects to see the metropolitan advertising market to “be flat-to-down marginally over the full year”.
Nine CEO Hugh Marks said in a statement: “The ratings and revenue performance of our core free-to-air business was disappointing in the first six months of calendar 2016, due to a combination of the challenging ad market and poor programming outcomes.” In other words, Seven and Ten did much better than we did. And while Seven pointed to a 15% to 20% fall in earnings before interest, tax, depreciation and amortisation in 2016-17 because of higher sports rights costs, Nine was more circumspect.
At Southern Cross, a more upbeat set of comments and presentation from CEO Grant Blackley — the man most tipped to replace Hugh Marks at Nine if the Nine board decides that new blood is needed. Nine already owns 9.9% of Southern Cross (at a cost of $89 million) and moved to a regional affiliate deal mid-year replacing the one with Bruce Gordon’s WIN, which now has a deal with Ten. Southern Cross is still Ten’s affiliate in northern NSW.)
Southern Cross said net profit rose 19% to $77.2 million and it expects “considerable growth” over the next year because of the impact of the affiliate deal with Nine. Revenue rose 5.1% to $642.3 million and debt fell to $340 million (down 33%). Nine also slashed its debt to $177 million from more than half a billion the previous year.