What you need to know:

• Nine's publishing division posted FY 22 EBITDA of $179.5m, up 53 per cent, inclusive of bargaining code cash. Exclusive of Google and Facebook's contribution, the gains were less than half, or an increase of 23 per cent to $144m.
• CEO Mike Sneesby said investment in content, product, journalists, marketing and tech is ongoing, and increased profit would be used to fund sustainable investment.
• Much of the increased cost rises forecast for the business come from ongoing investments in streaming, as the likes of Netflix and Disney+ race to be first to market with ad-funded models locally.

Nine CEO Mike Sneesby has defended a $35m profit boost from Facebook and Google via the news media bargaining code.

Per Nine’s results, its publishing division posted EBITDA gains of 53 per cent inclusive of bargaining code revenues, to $179.5m. Without payments, the result would have been a 23 per cent earnings rise to $144m.

Sneesby swatted aside any suggestion the cash is therefore going to shareholders rather than being invested in news content and journalists. He said it was a “misconception” that bargaining code money must be immediately reinvested in the publishing business.

"I'll... not shy away from saying that a profitable business is absolutely critical," he told Mi3. "There is no shame in any company making a profit. Profit in a company builds the balance sheet and it builds capacity to invest for the future. There's this misconception that keeps being raised - the way business works is you've got revenue that comes in at the top, you've got investment that you put in the business, you've got your costs and you've got your Ebitda that comes out the bottom.

"The arrangements with Google and Facebook  are both effectively arrangements where they take our content in exchange for revenue. That revenue comes into the business. There's no bucket of money that's sitting there that we work out how to divvy up," Sneesby insisted.

“The business has had great success this year in terms of its profitability.”

Profit is “critical” to enable reinvestment, he added, underlining that Nine has flagged rising costs as a result of “investments in people, content, product, technology and marketing”.

“Long term profitability means we've got great opportunities for the team. We've got great opportunity to invest in our strategic initiatives to grow the business and ultimately [sustain] a healthy business,” said Sneesby. “We're going to continue to invest behind the things that [the publishing division] wants to do because they've delivered the results.”

Streaming wars heat up, costs rise

Money from the tech giants may also help offset rising costs as Nine invests further in its ad-funded streaming business amid surging advertiser demand and a race to market from international players including Netflix and Disney+, with rumours that the former may attempt to soft launch locally before the year is out and now briefing major buying groups.

Sneesby forecast ad-funded streaming “has significant growth ahead of it” but said a “key part” of projected cost increases for Nine’s total TV business is apportioned to “content marketing, product and technology, all associated with 9Now”.

“The reason for that, particularly in product and technology, is we have made a number of investments which we will continue to make into 2023 which are designed to make Nine Now an absolute premium experience,” said Sneesby.

He indicated user experience, and user interfaces, will become a key battleground as the streaming wars enter their next phase – and may determine the success or otherwise in flipping the balance of power between terrestrial and internet-delivered TV.

“You have the opportunity to deliver … a far greater quality and experience than what you can do in the broadcast environment,” said Sneesby.

Hence 9Now re-skinning its streaming app, with further improvements to come.

“You may have noticed recently the quality of 9Now streams increasing, the high levels of quality, the advertising products, the way that we deliver those advertising products … all of that goes into making up the proposition that a customer can enjoy,” said Sneesby. “The internet is simply a superior technology to broadcast when it comes to enabling that [experience].”