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.