Nine profits

Nine Entertainment is now clearly the best performing Australian media company. Its ability to lift revenue in its core TV business and profit and slash debt in the six months to December, as well as lifting dividend, made it a standout against weak or so-so results from rivals like Fairfax Media, Seven West Media and News Corp/Foxtel. Despite claims from Seven West management that it is the industry leader, so far as financial returns (which is the only criteria that matters in the end), Nine is way ahead.

In its half-year report released Thursday, Nine showed Seven and the rest of the local media (especially TV) a clean pair of heels. Ten doesn’t count for this comparison after collapsing last year and no longer releasing results under its new owners, CBS. Foxtel’s results are filtered through the accounts of News Corp and reported in a mix of US and Australian dollars, making comparisons very tough. Just one measure showed the size of the gap between Nine back to Seven — Nine lifted its interim dividend by half a cent to five cents a share. It’s not much, but a lot more than the big fat zero at Seven, which abandoned its payout to shareholders as part of a dramatic escalation of its cost-cutting program to $125 million this year and next. Nine’s commentary was free of the repeated talk of cost cuts and containment that dominated Seven West’s results on Tuesday.

Nine used the final proceeds of the sale of its Sydney HQ to slash net debt to $46.2 million (Seven’s was $711 million) from $177 million. The amount Seven cut was just $11 million. Nine boosted total revenue 9% to $719.6 million, Seven’s fell 10.4% to $809 million as its lead on Nine shrunk by $94 million. Nine reported earnings before interest, tax, depreciation and amortisation of $181.3 million, Seven, $176.8 million. Nine’s net profit was reported as $116 million, Seven’s at just over $100 million.

At the core asset — the free-to-air TV networks — Nine did better too. Revenue rose 10% to $636 million, Seven’s revenue shrunk 9.6% to $586.7 million. Seven’s earnings before interest and tax rose 3.1% to $147.4 million, Nine said its EBITDA (a different measure, I know) jumped 51% to just on $172 million.

Nine and Fairfax’s streaming platform, Stan, lifted subscribers 33% to 930,000. Nine gave little away except that Stan had revenue growth of 83%, and a cost increase of 29%. No revenue or profit/loss figures were provided. Over at Fairfax though, the half year was weaker than Nine, but arguably stronger than Seven (both Fairfax and Nine remain in constant cost cutting mode). Fairfax’s revenue fell 3% to $873 million for the six months to December, net profit fell 10% $76.3 million, while EBITDA edged up 1.3% to $147 million.

Peter Fray

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