ANALYSIS - Mike Sneesby has inherited Nine at the top of its game

Chris Pash
By Chris Pash | 4 March 2021
Mike Sneesby.

Mike Sneesby, who built Stan into a $1 billion asset with 2.3 million subscribers, is taking over as CEO of Nine Entertainment at a time when the media group is streamlined and ready to capture revenue and market share.

Much of the work of positioning Nine  -- with 40% of revenue coming from digital -- has been done by outgoing CEO Hugh Marks. 

And market analysts see Nine Entertainment, with strong half year results just announced, as a key beneficiary of a strengthening advertising market.

This is reflected in the share price, at more than $3, trading at a multi year high, making Nine an almost $5 billion company. 

Nine recorded just a 2% dip in revenue to $1.18 billion in the six months to December despite the pandemic.  Net profit of $178 million was 69% better than the same six months the year before. Shareholders are happy with a fully franked dividend of 5 cents.

The company is still exposed to traditional media, both print publishing and linear television, but its digital business is growing at a pace and the media group has been slicing costs to maintain profitability and fatten margins.

Rising ad spend following the pandemic year of 2020 is feeding into Nine’s business lines.

“Investing in NEC (Nine) is not only about getting exposure to the recovery in the ad market, but also growth in its digital business,” write analysts at investment bank Jefferies in a note to clients.

“The ad market is showing green shoots of growth, with television benefiting from advertisers shifting back to brand building, as opposed to shorter term sales boosts through digital advertising.”

Nine expects March quarter free-to-air revenue to be up low to mid single digits.

Macquarie forecasts free-to-air metro ad TV markets growth at +20%, bringing full financial year ad markets to 94% of pre- COVID levels, using 2019 as a reference point. They expect the recovery to continue into 2022.

And Nine’s market share should hold steady at 41%.

Analysts at Macquarie say Nine "provides a high-quality exposure to a cyclical recovery". 

"Nine’s primary channel share continued its strong performance in 2020 and has accelerated in 2021 due
to the Australian Open," they write in a note to clients. "We note ratings generally have a 12-month lead to revenue share."

macquarie fta tv forecasts

Positive subscriber momentum is expected to continue for Stan, an asset rated highly by analysts because of growing subscriptions. Revenue increased 28% to $149.1 million in the six months to December.

Digital will drive growth in publishing but this will be partially offset by weakness in print, say the analysts at Jefferies.

And then there’s the cash which will come from deals with facebook and Google. Some put the Google payment for Nine‘s news at $65 million.

Investment Bank Goldman Sachs is forecasting a robust TV market.

Its analysts are forecasting FTA TV growth of 18% in the six months to June with Nine’s shares at 41.6%.

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