Nine Entertainment Co's poor start to this year's ratings season and a declining advertising market have been blamed for a below-par performance in its 2015/16 financial year.
In a shareholder announcement today, NEC reported a 6% drop in revenue to $1.29 billion and profit decline of 15% to $121.8 million on a like-for-like basis.
Nine significantly reduced its debt from $507.2 million to $177.6 million after selling its events business Nine Live. This sale and poor TV performance dented Nine's operating cash flow, which fell by 80% to $50.3 million.
“As a business we are incredibly focused on regaining momentum in ratings and revenue, with a well advanced content plan for 2017," CEO Hugh Marks says.
"The combination of our free-to-air, SVOD, AVOD and other digital assets is unique in this market and provides a strong platform for us to meet the changing needs of our audience and customers in the future.”
TV below par
The network acknowledged its TV business suffered from poor programming in the first quarter of 2016, fewer hours of “premium Australian content” and a declining advertising market, down 3.9% in the first half of this year and 2% across Nine's FY16.
Nine Network's revenue declined 7% to $1.13 billion and profit was down 11% to $183.5 million. Overall, TV costs were down 6.2%, helped by the government's TV licence fee reduction despite and TV production cost savings of 2%.
Several shows in the first quarter of this year either flopped or underperformed, including Reno Rumble, Australia's Got Talent and The Farmer Wants a Wife, while Nine's summer of cricket suffered from shorter test matches due to a weak visiting side.
Nine's digital business reported a 4% revenue decline to $149.9 million but a profit increase of 19% to 26 million.
This was due to the loss in Microsoft default traffic after Nine severed ties with MSN and the sale of HWW. Without these adjustments, revenue was flat, but Nine will be hoping for stronger gains in the current fiscal year after launching a suite of consumer content verticals and redesigning its digital network.
Bonus payments down
Nine's below par performance cost key executives in incentive payments for FY16 with new sales boss Michael Stephenson receiving only 8% of his target short-term incentive, albeit for less than half a year's work.
Chief executive Hugh Marks and NEC managing director Amanda Laing both received 20% of their STI target.
The report also revealed the scale of severance payments to key executives who departed in FY16, including former CFO and COO Simon Kelly ($2.19 million), chief revenue office Peter Wiltshire ($758,820 - including annual and long service leave) and CEO David Gyngell ($604,166).
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