Nine released its full-year 2024 financials, revealing that the company’s revenue and profit are significantly down, despite its audiences growing. There are positives in Nine’s accounts, but a challenging TV advertising market looms large. The media company is bullish about the year ahead with an Olympics-sized ($160 million) shot in the arm.
Australia’s largest media company has reported a 3 per cent decline in revenue to $2.62 billion, and a 12 per cent drop in group profit (EBITDA) to $517.4 million in its 2024 fiscal year – but that doesn’t tell the full story.
In its annual results presentation today, Nine said it has grown its total TV audience – which includes its linear TV channels and BVOD 9Now – and its share of digital revenue is now 50 per cent of the overall pie.
Nine’s success at growing its audience is not a reflection of the overall TV market. Linear TV audiences are down overall – with low double-digit declines – but Nine has been successful at migrating audiences away from free-to-air TV to its 9Now BVOD platform.
Nine has a 40 per cent share of free-to-air TV audiences across Australia’s metropolitan cities and nearly half of BVOD audiences (49 per cent in the second half of FY24) when audience figures are pooled with 7Plus and 10 Play.
Nine grew its BVOD revenue by 8 per cent to $189 million in FY24. This is positive, but still well short of the money leaving its linear TV business, which was down by 12 per cent to $941 million.
Looking ahead to FY25, Nine expects its financials will grow, partially due to its Paris Olympic and Paralympic Games coverage. The company said it has booked $160 million in revenue (advertising and subs) from these events and that it would be a profitable venture; Olympic Games media rights are often loss-making ventures for media companies.
Nine also expects the TV advertising market decline to stabilise in the coming fiscal year. When the current economic downturn subsides, money could return to linear TV, albeit not at previous levels.
The Olympics has also led to a surge in subscriptions. Stan Sport subscriptions have grown by 50 per cent, although this figure could drop off once the Paralympic Games, which begin this week, are done. Overall, Stan now has 2.3 million subscribers (up from 2.2 million a year go), which is a healthy figure in a market the size of Australia. Stan’s revenue grew by 5 per cent to $447 million.
A senior media buyer, who spoke to B&T under the condition of anonymity, said that the total TV market for linear is still in structural audience and revenue decline, and is being hit hard by cuts to advertising budgets and a growth in the “number of advertising opportunities” across the spectrum of media.
That said, it’s not inconceivable that linear TV ad budgets could rebound, but the overriding trend is one of slow decline, the buyer added.
This makes Nine’s rapid transition to digital media all the more important.
On the news publishing front, Nine reported a 3 per cent revenue decline to $558.6 million, a performance well above the double-digit declines across the print advertising market.
Nine’s radio business revenue declined by 3 per cent to $103.3 million, despite the strong performance of 2GB in Sydney and 3AW in Melbourne.
Nine’s fastest growing division is the real estate marketplace Domain, which was up 12 per cent to $396 million.
A tough year
Nine has also taken tough decisions to shore up its cost base, recently making about 200 staff redundant. Nine stripped away $65 million in costs in FY24 and expects further savings in FY25.
The recent industrial action, led by a section of print journalists and production staff across Nine’s mastheads, has led to a 3.5 per cent annual pay increase, while Meta’s withdrawal of its news media beginning code arrangement has also cost Nine millions in annual revenue.
At an investor briefing earlier today, Nine CEO Mike Sneesby said that although traditional media revenues were down, the company’s audience and revenue share results were “strong”.
He added: “In particular, we grew actual free-to-air TV audiences, which resulted in a full-year share of 40 per cent in terms of revenue, including a second-half share of 41.2 per cent. Our subscription and licensing revenues are now more than 30 per cent of wholly owned revenue, with 5 per cent growth for the year, and growth at both Stan and our publishing divisions.”
Sneesby also addressed public concerns about Nine’s workplace culture, which flared up earlier this year when former news boss Darren Wick was accused of sexual harassment and left the business.
“We are incredibly proud of what our people have achieved this year, and recognise the challenges they face as the difficult operating market has resulted in ongoing cost efficiency measures,” Sneesby said.
“However, I should acknowledge that we have also faced very public commentary regarding our culture and the actions we are taking to deal with unacceptable behaviour in our workplace.
“We take these comments and the feedback from our team members incredibly seriously, and have worked with industry-leading third parties to understand the extent of any issues, and similarly, to ensure our processes and culture encourage an inclusive and positive working environment.”
Nine’s chief sales officer Michael Stephenson was cautiously optimistic about the TV advertising market outlook, citing Nine’s control of 48 per cent of BVOD revenue among its competitive set that includes Seven and Network 10.
“We had an excellent start to the year… Obviously, we will have an excellent result in August as a result of the strength of the revenue generated by the Olympic Games and Paralympic Games,” Stephenson said.
“Whilst the market continues to be challenged, the ad markets are directly correlated to consumer confidence, and the economic environment continues to be tough, but we are starting to see some marginal improvement.
“If you have a look at the broader marketplace in the financial year, the ad market declined by 1.6 per cent, but total television declined by 8 per cent. I’m confident that as we see this normalisation of audiences, any decline in traditional audiences will be more than offset by live streaming and on demand audiences, and advertising revenue will follow that audience (migration).”
