What you need to know:

• Expectations that a new Nine CEO would be unveiled yesterday at Nine’s strong earnings results failed to materialise.
• Outgoing boss Hugh Marks lobbed a few barbs at rival deals with Google, saying they were inflated by bundling in cash advances on income “that was coming anyway”.
• Facebook’s knife fight with the federal government was not a win for the tech giant but “codifying what we understood to be how it would operate”.
• News audiences will decline as a Covid ‘new normal’ emerges.
• Nine’s TV surge in the December quarter and continued momentum into 2021 was partly fuelled by companies re-weighting ad spends to brand-building messages over performance retail-style ads in digital media.
• Live streaming of shows and events is giving advertisers an audience bonus of up to 10% – which is not measured or monetised effectively – Nine will address it this year.
• Net profit soared to $182m on revenues of $1.2bn.
• Nine wedged arch rival Seven on Jobkeeper, stating it will repay the taxpayer subsidy while Seven, so far, says it will not.

Irregular apocalypse 

So much for Covid. Nine cemented itself as the darling of the legacy media sector yesterday as earnings soared, its share price hit an all time high, and outgoing CEO Hugh Marks painted an upbeat picture for the broadcast and publishing business.

The frantic pace of recent weeks, as media and the federal government engaged in a street fight with big tech, has resulted in financial deals which Marks said would be invested in long-term programmes that will ensure Nine’s publishing unit is sustainable for the next decade.

As a parting shot, Marks took a nano-veiled aim at Seven’s deal with Google. “No two deals will be the same,” he told Mi3. “No two numbers will reflect the same thing. One will pay legitimate income, one might be a cash advance on an income line that was coming anyway. So watch out on this space. Wait until you see the detail before drawing any conclusions.”

Marks also downplayed Facebook’s deal with the federal government to restore news and the terms it negotiated.

“What happened in the end didn’t really change the outcome,” he said. “There’s no great loss on any part. If you look at it long term, codifying how things operate is probably not a negative. It could have been handled better but I think the outcome is right.”

Creative measures

Marks remained upbeat about TV, radio and publishing audiences holding up across linear and digital as the Covid wrecking ball loses velocity, although he admitted news would likely be hit.

“There were two forces at play last year,” said Marks. “One was people at home. The other was a huge rise in SVOD [streaming video]. So there was a tailwind and a headwind. News and current affairs benefited from Covid but I don’t think it’s the case for entertainment. Homes were willing to switch to on demand as opposed to broadcast if they felt that’s where they were going to get the best value,” he added.

“I don’t see any shift from what I would consider to be long-term trends at this point. I would expect at the margin – it’s not significant – that news and current affairs will be down versus last year.” 

As such, he admitted creative teams were facing "more pressure than in the past ... We cannot take an an audience for granted. We have to deliver them good content".

Marks pointed to 9Now’s live streaming audience of shows like Married at First Sight (MAFS), which represented about 10% of the linear audience since launching. 

“We don’t necessarily monetise that separately, so advertisers are getting the benefit of that incremental audience," he said. "That’s an interesting development. We have to get our measurement reporting accurate and comprehensive on that, which we will do through the course of the year. What we’ve got to do is decide what’s the measurement, what do we release to the market as numbers and how do we monetise that?”  

Writing cheques

Asked whether the cash injection from Google and Facebook from the Federal Government’s mandated media bargaining code would be invested in journalism or to bolster Nine’s bottomline, Marks said: “We may have a growing publishing business again.

He added: “It will enable us to invest in a different way to what we could before and to invest for the long term – because we now have another revenue line from another platform. In entertainment we can do that ourselves. In journalism that was much more difficult. So that is a really significant shift. It’s a really exciting development for the people in this place.”

Last week Mi3 estimated the combined value of the deals struck with Google and Facebook was likely to be between $200m and $250m a year, which should add substantially to Nine's balance sheet next reporting period.

Key financials:

• Share price hit all time high as digital growth and cost-cutting powered net profit to $182m on revenues of £1.2bn.
• Digital: Earnings increased +53% and now make up 41% of total earnings (Ebitda).
• TV: Cost cutting and a second half pick-up boosted FTA TV earnings +55% to $171m, with highest margin (+33%) since ASX listing in 2013.
• Radio: struggled to recover. Nine radio revenues reflective of broader market, down -19%. Overall radio earnings -62%.
• Publishing: $39.3m cost cuts offset revenue falls to deliver $68.1m earnings, +14.4%. Print sales fell by -18% and print advertising “remains soft”.
• Streaming: Stan earnings +161% to $36.5m, margin doubled to +24.5% despite higher marketing and content costs. Active subscribers at 2.3m.
• Domain: Cost cutting drive (-$17.4m) led to +16% earnings gain (+$7.4m).