Advertising slump contributes to NINE’s financial downturn

NINE experiences a significant profit drop of 40% due to economic conditions and high costs, but sees growth in subscription services.

Nine has reported a notable decline in its financial performance for the half-year period ending December 31, 2023. The media conglomerate experienced a 40% reduction in its profits, which dwindled to $113.8 million from the previous year’s $189.5 million.

This downturn is attributed to an amalgamation of high costs, including a $52 million impairment charge on content deemed non-recoverable and various restructuring expenses. Concurrently, Nine‘s revenue witnessed a slight dip of 2%, settling at $1.34 billion.

The underlying causes for this financial downturn have been pinpointed to the adverse impacts of “challenging economic conditions on the broader advertising market,” as highlighted by Nine CEO Mike Sneesby in the company’s ASX announcement.

Despite these challenges, Nine has identified a silver lining within its subscription-based ventures, which saw an 8% growth. Subscriptions now constitute 30% of the group’s total revenue, indicating a shift in Nine‘s revenue composition.

“I am particularly pleased with the performance of our subscription businesses – with subscription and licensing revenues at Nine’s wholly owned businesses, Stan and Publishing, together growing by around 8 per cent, to more than 30 per cent of Group revenue ex Domain.

At Stan, 11 per cent revenue growth and more than 40 per cent EBITDA growth is testament to Stan’s strong positioning in Originals and Sport which continues to pay off, as well as its focus on cost efficiencies,” Sneesby elaborated.

Peter Costello, Nine‘s chairman, echoed Sneesby’s sentiments, expressing satisfaction with the company’s resilience and adaptive strategies amidst economic adversities.

Costello reaffirmed the company’s enhanced competitive stance and its well-preparedness for future challenges, attributing it to the diversified nature of Nine‘s business portfolio.

“I am very pleased with the way the Company responded to the broader economic challenges in the second half of calendar 2023. We have enhanced our competitive position.

We are positioned well for the future. The breadth of our different businesses has proven its worth in these conditions.”

Furthermore, Sneesby advocated for governmental intervention in the realm of digital content compensation, particularly urging a reevaluation of the “news media bargaining code.” He highlighted the significant evolution of the media landscape since the code’s inception, underscoring the imperative need for regulatory adjustments to ensure fair compensation for Australian media companies.

Sneesby pointed out the extensive audience engagement garnered by Nine‘s premium video content on social media platforms and the emerging challenges posed by generative AI services, which leverage public interest journalism to enhance their algorithms.

“For example, Nine’s premium video content continues to drive huge audiences on social media platforms, while we are also witnessing the rapid growth in generative-AI services which utilise our public interest journalism to build and train their models.”