Nine Entertainment has been slapped with a refreshed ‘buy’ rating from Citigroup this morning after it reiterated in report into the Free-To-Air TV market that the TV network is a “potential mergers and acquisition target for content owners.”
Citi’s renewed signal to the market comes on the back of major developments at the network which saw it offload its highly profitable events and ticketing business Nine Live to Asia-based equity firm, Affinity Equity Partners, for $640m.
The sale to Affinity is thought to have wiped out Nine’s net debt of $490.5m. Its share price has since fluctuated but currently stands higher than it has been for the past three months, today sitting at 2.28 per share.
“With or without the Nine Live arm, the business was still exposed to the same structural pressures, only now it has more balance sheet flexibility and more cash to maybe try and offset some of those risks (associated with FTA),” Citi media analyst Justin Diddams told AdNews.
He added, “It provides them with a lot of flexibility to invest in content, to make acquisitions of new business, and, or, presents them as a mergers and acquisitions target.”
The 'buy' rating comes in the wake of a report today from Citi that the free-to-air TV market is heading for zero growth and that the struggle by networks to capture market share has come at the expense of ad dollar revenue.
Interestingly, it was also revealed last week that Ten Network’s largest shareholder Bruce Gordon increased his shares in the firm – previously under 5% which would have meant disclosure to the ASX – to roughly 20 million.
Nine failed to comment by the time of publication.
Email Nicola at nicolariches@yaffa.com.au.