Nine to take full control of Mi9

By AdNews | 14 October 2013

Nine Entertainment Co. has confirmed it will take full control of digital joint venture Mi9 ahead of its looming $3 billion IPO, ending its 15-year partnership with Microsoft.

“This agreement allows NEC to retain the key elements of our almost two decade strategic partnership with Microsoft. It strengthens the platform for NEC’s growing digital video business and ultimately allows us to control 100% of our digital future,” said Nine Entertainment Co. chief executive David Gyngell.

Nine and Microsoft have signed a long-term 'strategic partnership' agreement which will see Mi9 continue to sell the technology company's advertising products while leveraging its data and technology capabilities.

“Mi9 is a true leader in Australia’s digital marketplace and we’re confident in the company’s continued success,” said Axel Steinman, vice president for emerging markets, Microsoft Advertising. “Our strategic partnership agreement will see the continuation of our strong relationship with Mi9 and NEC well into the future."

The Australian Financial Review puts Mi9's earnings before interest tax, depreciation and amortisation at between $25 million and $30 million for FY13, estimating Microsoft's stake in the business to be worth around $100 million. Nine is understood to have paid US$39.1 million for Microsoft's share.

The move comes as Nine looks to shore up its digital capabilities ahead of its IPO, slated for early December, and Microsoft undertakes a review of its partnerships as it repositions itself as a 'devices and services' company.

Mark Britt will continue as Mi9 CEO.

“Ninemsn and Mi9 have been a critical part of NEC’s digital business for many years. With the continued convergence of TV and digital, I’m incredibly excited to be able to be able to leverage NEC’s extraordinary entertainment offering and our continued relationship with Microsoft to be the digital partner of choice for our users and clients,” Britt said.

It it understood that the deal is unlikely to impact the proposed premium private exchange being discussed by Nine, Fairfax and News. Yahoo!7 was originally thought to be part of those discussions. The exchange is taking time to develop as News considers its strategy following senior management changes at the organisation.

Britt told a media briefing that it would be "business as usual" for now – Mi9 will remain a distinct operating identity going to market, and the Ninemsn URL will continue, although he said he "suspects at some point" the Ninemsn would be rebranded to remove the MSN component.

On the value of the deal, Britt said the amount paid shouldn't be looked at as an effective price for the business but a reflection of Microsoft moving from an equity position to a long-term strategic partnership. "This is not really an acquisition, it's a restructure of the business at a corporate level," he said.

"There is a purchase of shares [as a part of that process] and there will be a price attached to those shares – that said, I don't think it it reflects the shareholders' value of the business."

Britt would not be drawn on whether the buyout heralded the end of joint-venture technology partnerships à la Mi9 and Yahoo!7. "I'm not going to comment on any other sort of JVs that may exist in this market.

"What I would say is there is an enormous amount of change going on in media globally, and we think this positions us well to take advantage of the benefits of having access to data and technology from Microsoft, while having the flexibility and freedom to approach new opportunities that we haven't been able to in a joint-venture structure."

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