The departure of Hugh Marks, who has led Nine to become a market-leading media player, is unlikely to lead to a sudden change in direction.
Industry insiders were high with praise for Marks, who resigned as CEO at the weekend following disclosure that he had a relationship with a direct report at Nine.
They cite streaming platform Stan, now valued by analysts at between $900 million and $1.2 billion, the merger with Fairfax, the Nine Network’s increasing share of free-to-air television advertising revenue and a diverse revenue stream from digital.
A new CEO will have a hard act to follow but will start with a strategy to grow digital advertising and subscription revenue in place.
Nine’s share price took a 1.6% hit when news of Marks' departure reached the ASX. But the market approves of Nine. Its shares last traded at $2.42, a long way up from the year low of $0.815.
The rise in market value of Nine -- at last report $4 billion -- is part recovery of confidence from the initial hit of the coronavirus and part continuing strength of the business itself.
Despite the pandemic, Nine is still paying dividends -- a stand out result in the local media market -- and the company is well positioned as the advertising market recovers.
Brian Han, senior equities analyst at Morningstar, doesn’t believe the exit of Marks will lead to a sudden change in the group’s modus operandi or its strategic direction.
Marks, says Han, transformed Nine from a one-trick pony with 90% of earnings from structurally challenged free-to-air TV to a multimedia entity, with its digital-centric Domain, 9Now, Digital and Stan accounting for more than 40% of group earnings.
And that digital revenue is growing as a proportion of Nine’s revenue.
“Since taking over from the previous programming-centric chief David Gyngell in November 2015, Marks has proven his corporate nous,” Han writes in a note to clients.
“He dived all-in on (streaming content platform) Stan, while Nine’s free to air TV peers fretted about cannibalisation threats of subscription video on demand.
“He boldly pursued the Fairfax merger in 2018, ending up with control of digital crown jewels in Domain and Stan (the other 50% shareholding) when Seven dithered about Fairfax and let the opportunity slip by.
“And he filled the pipeline with content more conducive to driving growth in 9Now’s broadcast video on demand unit (Married at First Sight, Ninja Warrior, Love Island), while showing scant sentiment for uneconomic and fading content (cricket rights, The Voice) or assets (Stuff, Events, Community Media).”
Industry analyst Steve Allen, the managing director of Fusion Strategy, says Marks’ reign has been near flawless in terms of strategy and operations.
“He has built and fostered a superb Management group with quite a few contenders now for his successor,” Allen told AdNews.
“Even with his departure Nine are set up for a very good first half of 2021.
“It should be an easy transition, steady as she goes. But should happen quickly so the inheritor can get second half of 2021 and 2022 strategic direction sorted.
“Marks has been one of the best Media CEOs we have witnessed.”
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