Hugh Marks, CEO of Nine Entertainment, is seeing a pick up in activity by advertisers in the September quarter.
Nine, in releasing annual results, says ad markets were heavily impacted by COVID-19 from March 2020.
However, Nine was quick to protect the business, with $225 million in cost cutting.
“I'm feeling increasingly more positive about the progression out of COVID,” Marks told AdNews.
”Each month is improving, the market's getting a little less short.
“We're out achieving what our targets were in August and I suspect we'll do it again in September.
“I think the market's just planning its way out of COVID and it will be an orderly progression rather than a dramatic shift.
“We've planned around that. We feel reasonably positive that there's a path out that we can see and that we're on that journey.”
The media company posted a $508.78 million loss in the year to June mainly on impairment of goodwill. Excluding special items, profit fell 17% to $155.4 million.
However, Nine says the market is performing ahead of earlier expectations, and appears poised to recover when the COVID condition stabilise.
At this stage, Nine’s September quarter free-to-air television revenues are expected to be down about 15%, reflecting the continued weakness in advertising markets.
Nine was one of the few media groups not to cut pay or working hours of its staff. And the shareholders are still getting dividends. The company announced a fully franked dividend of 2 cents a share, taking the full year payout to 7 cents.
“There was no reason for us to cut pay. We have to support our staff through COVID and that's what we did,” says Marks.
“Our cash flows have been significantly better than what we anticipated as well, so those decisions have all been justified in hindsight.”
And the main Nine group didn’t access the federal government’s JobKeeper. However, Pedestrian TV, CarAdvice, Nine Events and Domain did share $6.1 million in payments.
The migration to digital accelerated during the pandemic across both Nine’s publishing and video assets.
And digital advertising markets have improved faster since.
In the year to June 2020, the combined contribution from Stan and 9Now, the digital components of Domain, and the publishing side, grew by 40% to about 48% of total EBITDA (earnings before interest, tax, depreciation and amortiastion).
“All digital subscriptions across Stan and metro media business had acceleration of take up through the period,” says Marks.
“You're probably see some moderation of those growth rates as we go into the next year but it's been a step change in both businesses.
“A lot of businesses talk about their transition to digital, but we've got, you know, almost $180 million worth of earnings in that space.
“And that's why I think we're, we're in that better shape than most of our peers.”
9Now’s earnings growth will be tempered by increased investment in content, as the business expands into the broader digital video market.
Nine Radio is expected to show a marked turnaround, as advertisers return to the Network and the cost base is reset.
Metro Media’s digital trends are expected to continue to improve, but offset by further short-term declines in print. There are further cost initiatives to come in the short term, from reduced printing costs.
The Sydney Morning Herald, The Age and Financial Review saw a 20% lift in paid digital subscriptions in June compared to the same month last year. However, the pandemic, and subsequent lockdown, meant falls in print retail sales.
In the Metro Media business, reader revenue now makes up almost 60% of total revenue.
Stan. Current subscriber (2.2 million) momentum is expected to continue at Stan but at a more moderate rate in 2022. Stan maintains its positive long-term view of market potential, and therefore will continue to invest in content.
A slide from Marks' presentation to analysts:
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