Nine Entertainment flags a further $100m in cost cuts
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More news: Nine Entertainment flagged a further $100 million in costs set to be carved out of the business through to the end of the 2027 financial year, on top of the company’s previous guidance of $50 million in 2025.
Nine’s acting chief financial officer, Graeme Cassells, told analysts on Tuesday that the company expects to exceed its 2025 cost saving target by about $10 million to $20 million.
He said the company expects to have pulled half of its additional $100 million cost saving target out in the 2026 financial year, with the remaining $50 million to come out in 2027.
The company in an announcement to the market on Tuesday said it will continue work on its strategic and cultural transformation, dubbed Nine2028, with ongoing restructuring of the business through the second half of the 2025 financial year and into 2026.
Shares in Nine rose about 4% in early trading on Tuesday to $1.70 a share at 10:28am AEDT.
What they said: “So look, when we go through this, we have [been] trying to move quickly on this,” Nine acting chief executive Matt Stanton said in response to an analyst question about where the savings have come from, and whether the costs have been itemised line by line or if the program is benchmarked.
“Obviously, we announced back at FY24 we were taking out $50 million; we took $50 million out there. This year we announced $50 million; it’d be more like $60 million to $70 million, because of some of this pull-forward of this $100 [million] we’re trying to do relative to the cost program is both pretty strategic in what it does, but also it is granular as well.
“So we have got a spreadsheet, line by line, where we go through, work through every area of the business, that we look at. But there’s some strategic nature to it as well, moves through that. And that allows us to set us up for growth in the future, especially around the digital video market and our platforms that we’ve got.
“So the big three or four things we talked about, especially in the better use of content commissioning across our platform. So the whole point of the operating model change to bring streaming and broadcast together is very considered in the fact that it will look at how do we use that content across those, in effect, three platforms at the moment, in free-to-air, BVOD [broadcast video on demand] 9Now, and through Stan.”
Nine profit falls amid lost Meta revenue, tough ad market
The news: Nine Entertainment posted a first-half net profit of $95 million, amid tough economic and advertising conditions, and the loss of the company’s revenue from its commercial deal with Meta.
The numbers: Revenue grew 1% to $1.41 billion for the half. However, group earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 15% to $268 million, with net profit after tax and minorities of $95.1 million, down 29% on the same period last year. The company lowered its dividend 13% to 3.5 cents a share.
The company reported growth in streaming and broadcast audiences across Nine and Stan. Underlying subscription revenues, excluding Domain and the revenue raked in from Google and Meta, was up 8% for the half, with growth at the company’s metro newspapers, the Australian Financial Review, and Stan.
Nine said it delivered $35 million in cost efficiencies through the half, with its $50 million cost-out target expected to be exceeded.
The company also noted CoStar’s $2.6 billion takeover bid for Domain lobbed last week. Nine said Domain remains of strategic importance to Nine’s media ecosystem and the company’s “long-term growth strategy”. The company said it’d consider the proposal.
What they said: “In a challenging market environment, we have continued to perform well operationally, while simultaneously strengthening our strategic position and implementing our cultural reset,” Nine chair Catherine West said in a statement Tuesday.
Nine’s acting CEO Matt Stanton said: “Operationally, we were generally pleased with the performance of our portfolio in the half. In particular, at Stan, subscriber numbers exceeded our expectations, underpinning 16% growth in EBITDA whilst at Publishing, digital subscription revenues at our mastheads grew by 15% (ex the impact of Meta and Google), with the team also doing a great job with cost efficiencies offsetting much of the impact of the Meta withdrawal.”
The source: ASX media release
