Nine reports 'softness' in advertising dragging on earnings

By Chris Pash | 12 November 2019
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Nine today reported a continuing softness in the overall advertising market will drag down full year results to "low single digit" growth. 

Advertising from almost every major advertising category was weak in the September quarter particularly auto, government, domestic banks and gambling, says the media group. 

"The prevailing weakness in consumer sentiment in Australia has manifested itself in weak trading conditions for many consumer facing businesses, and general softness in the overall advertising market," Nine says in a trading update to be released at its AGM today.

"And whilst our business has become much less subject to the vagaries of the ad market, this weakness has of course, 
impacted," says Nine.

In the three months to September, Nine’s Metro Free To Air business achieved a leading revenue share of 39.8% but the market was down by 6.4% on last year.

Early signs of an improvement in the December quarter, given a broadly flat September, "unfortunately dissipated" in recent weeks.

The free to air television market in the second quarter looks like being down by at least as much as the September quarter.

"We now expect the market to decline by mid-single digits across the full financial year," says NIne.

"We remain confident about share gain through the second half on the back of our audience performance earlier this calendar year, and will be working hard to soften the impact of the weak start to the year."

Free to air television costs are now expected to be 2.5% higher as opposed to the 4% in previous guidance.

Radio has been hit by similarly soft market conditions in the current half exacerbated for Macquarie by the advertiser boycott around the Alan Jones’ program on 2GB.

"We are confident that full ownership by Nine from November will underpin improved performance, both in terms of reduced
costs and the potential for incremental revenue on a medium-term basis," says Nine.

"Integration work is well progressed and we are now operating under a new consolidated structure."

In Digital and Publishing,  results from display and short form video are improving.

The BVOD market grew by 34% in the September quarter and 9Now’s share remains just below 50%.

"And in Metro Media, we have continued to gain share across both print and digital mast-heads and further benefited from merger synergies," says Nine.

In Stan, subscriber momentum has continued through the current period and the business is performing ahead of expectations on all metrics, including profitability and cashflow.

"Stan has an increasingly entrenched market position and will continue to grow as both international content supply, and consumer demand for that content expand furthe," says Nne.

 

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