Nine Entertainment Co's group sales director Peter Wiltshire admits “we were our own worst enemies” over cooking reality wars with Seven, as the company reports a $592.2 million net loss after tax
The company has seen $592.2m full year net loss after tax as a result of write downs in what CEO David Gyngell has called a “difficult free to air market.”
Net profit after tax (NPAT) for the company, before specific items, was down 2.9% to $140 million however its reported NPAT was impacted by $732m in specific items primarily the write down of licence and goodwill.
Revenue for the company grew 2.6% in the 2015 financial year to $1.61 billion. Group earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 7.6% to $287.3m, consistent with guidance of $285m - $290m.
“In what has been a difficult free to air (FTA) advertising market, our June quarter share performance was short of our expectations,” Gyngell said.
“However, we are pleased with our improving ratings performance trend over the first couple of months of FY16.”
For its FTA assets, advertising revenue share increased from 38.7% in the prior corresponding period to 38.9%.
At an investor presentation group sales director Peter Wiltshire said the result was on track to be higher but was interrupted by ratings challenges in the second half, including the deferral of its hit show The Voice.
“It was also during this period that Nine's ratings were impacted by the two leading network's programming formats of the same genre head to head,” Wiltshire said.
“To some extent we were our own worst enemies. As we competed aggressively this caused pressure on overall audience for FTA TV and specifically Nine's share of that audience.
The size and magnitude of these changes coincided with advertisers turning to shorter term buying decisions based on immediate ratings history to support their actions and this clearly worked against us as buyers looked to Q3 ratings in allocating Q4 revenues.”
But Wiltshire added that as of the start of FY16 “audiences are back and our revenue will follow”.
Nine also noted its solid growth from digital and the importance of the format going forward, with Gyngell pointing to its acquisition of the digital NRL rights as an indication of its direction as a business.
“I think you need to own all rights. When we were negotiating I just kept banging on that you have to own everything everywhere”.
“Digital rights are critical to us,” Gyngell said. “I think you need to own all rights. When we were negotiating I just kept banging on that you have to own everything everywhere.”
Asked about how close it would be to launching an offering similar to Seven's “anytime, anywhere” streaming service, Gyngell said that having all of it available is the long-term aim but by the end of the year he said the group is likely to have 50-60% of the digital streaming rights available for its shows.
However he said doing so is not “a game changer”.
“Technically yes we're all capable of that. I don't see it as a game changer, I just see it as where you have to be to where you audience is. So I don't think it radically changes the world, it's just a fact of life,” Gyngell said.
“The challenge we've got now is that with all the shows that we're talking about - and people are worried about - they’re all pretty close to the same numbers they were doing a year ago or two years ago. [The audience numbers] are just coming in in catch up, they're coming in on an AVOD service, they’re coming but we can't charge for them,” Gyngell said. “It's a worldwide problem.
“All we can deal with is that we've got to keep all those rights.”
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