Nine Entertainment gains on lower TV costs
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More news: Shares in Nine Entertainment gained on the ASX after the media group said it expects lower TV costs in FY24, as well as growth in subscriber numbers for its streaming and publishing businesses.
Nine shares were up 1.3% to $1.52 by 2:40pm AEST.
E&P Capital analysts said they expected the market to respond positively to the trading update, which included lower costs than they had forecast. They noted that while revenue trends "remain challenged", the advertising weakness was "largely known" by traders.
Nine expects TV costs to decline marginally
The news: Nine Entertainment expects its total television costs to trend down marginally into 2024, as the company continues to wrestle with a troubled advertising market and uncertainty over digital platform deals.
The context: In a trading update ahead of the Macquarie Australia Conference in Sydney on Wednesday, Nine said total TV costs in the 2024 financial year are expected to decline marginally on 2023, “notwithstanding content and technology” investments, which it expects to be offset by savings.
Nine said its streaming platform, Stan, and its publishing business, are expected to see ongoing subscriber growth. The company said its publishing business is due to see revenue growth in the low double digits through the second half, despite ongoing advertising challenges.
Nine has come under pressure to take action on costs in the face of sustained weakness in the metro TV advertising market, which fell some 17% in March year on year, and social media giant Meta’s decision to pull funding from news publishers.
What they said: “With the benefit of targeted savings, we continue to expect total television costs in FY24 to decline marginally on FY23, notwithstanding incremental content and technology investment which will be more than offset by other cost reductions,” chief executive Mike Sneesby said in prepared remarks released to the market Wednesday.
“Nine’s subscription businesses, Stan and publishing, continue to perform well, benefitting from ongoing subscriber engagement and augmented by price increases. At Stan, Nine continues to expect growth in both revenue and EBITDA in FY24.
“Nine’s publishing business continues to benefit from the digital growth of digital audiences, with digital subscription revenue growth expected to be in the low double digits in H2 driven by both subscriber numbers and average revenue per user.
"However, the advertising market remains challenging, particularly digital display, mainly reflected in the performance of Nine’s ‘other’ publishing revenues (non metro mastheads).”
The source: ASX announcement
