(Image: AAP/Joel Carrett)

The COVID-led destruction of Australia’s news media revenue has continued with Nine Entertainment announcing $702 million of impairments, weaker revenues and earnings — except for streaming service Stan — and a lower dividend.

The pandemic and lockdowns have not left a single company in the media sector untouched, especially News Corp with its US$1.5 billion (A$1.8 billion) loss for the year and the massive write down at Foxtel, and Seven West Media’s $200 million loss, reported on Tuesday.

But Nine’s broader business base helped it offset weaknesses in free to air TV and newspapers. Domain, the real estate listings company 59% owned by Nine, suffered a 10% fall in revenue and a 17% drop in earnings, while its digital and publishing arm (home to The Sydney Morning Herald, The Age and The Australian Financial Review) saw a 9% drop in revenue and a 19% fall in earnings to a weak $92 million.

Nine said all three papers saw a rise in reader revenues from income from paywalls. Nine said its Metro Media division reported a 4% decline in revenue for the year and over 9% in the second half thanks to COVID-19. This is a better performance than at News Corp Australia where revenue fell 16% in 2019-20.

“Nine’s strategy to focus on revenues generated directly from its audiences has paid off with reader revenues now accounting for around 59% of total revenues, far exceeding the contribution from advertising,” Nine said in the earnings release. 

The company recorded a $575 million loss for the 2020 financial year while revenues overall fell 7% cent to $2.1 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were down 6% to $396.7 million.

The bright light in the Nine accounts was streaming service Stan, which reported revenue of more than $241 million (up 54%) and EBITDA of $31 million compared to a loss of $21 million in 2019.

All other businesses saw revenue and earnings fall. Nine said Stan had 2.2 million subscriptions, close to a quarter of total streaming subs in Australia. Nine sees more growth for Stan — at a slowing pace but with more profit growth.

Impairments and write-downs totalled $702 million (pre-tax), the largest component being a total $591 million non-cash impairment of intangibles which included a goodwill write-down of $300 million relating to the Nine’s free-to-air television network across Sydney, Melbourne, Brisbane, Adelaide and Perth.

The asset impairment also included the write off of $28 million relating to payments made under the original NRL contract for rounds subsequently cancelled, as well as the prepayment relating to the postponed 2020 Cricket World Cup. It also included $195 million in impairments and write downs of the value of Domain. 

The write-down in the value of the Nine free-to-air network (like Seven’s write-downs and News Corp’s A$1.2 billion write down at Foxtel) indicates the companies see a weakening long term future (in terms of viewers, revenues and profits) for linear, free-to-air TV in this country. 

The three companies (likely alongside Ten) are now all the same page on this issue.

Peter Fray

Inoculate yourself against the spin

Get Crikey for just $1 a week and protect yourself against news that goes viral.

If you haven’t joined us yet, subscribe today to get your first 12 weeks for $12 and get the journalism you need to navigate the spin.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW