Nine made a reasonable ASX debut this afternoon, suggesting investors have weighed the risks outlined in its prospectus and retained an appetite. Nine outlined many of the usual concerns: regulatory, currency and market fluctuations, fragmentation of media. But one element is interesting.
According to the document, the decision to buy Microsoft's share in the Mi9 joint venture will mean that from next year the technology giant will no longer be obliged to redirect traffic to Nine properties. That includes redirects from properties such as Outlook, the email service used by around 4.5 million Australians.
It is understood that 65% of traffic to Ninemsn is direct entry and that the redirect traffic from Microsoft properties, while double-digit, is substantially less than the remainder. However, Nine admitted that its impact on traffic, and therefore revenues, “could be materially different” to the assumptions on which it has based its full-year 2014 earnings estimates.
Microsoft will likely launch some of its own services next year with Mi9 a candidate to sell those services. Should it do so, the prospectus notes that there will be “less of an impact as Mi9 will continue to receive some revenue, albeit at lower yields and margins than if that traffic had been redirected to Mi9 websites”.
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