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“Ad market, poor programming” behind 7% drop in Nine profit

Nine has also abandoned 'life of series' obligations with Warner Bros.

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Nine has cited a “challenging ad market and poor programming outcomes” for a 7 per cent drop in adjusted earnings today.

For the 12 months to June 30, 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 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%.

Nine also significantly reduced its debt from $507.2 million to $177.6 million after selling its Nine Live events business.

“The ratings and revenue performance of our core free-to-air business was disappointing in the first six months of calendar 2016, due to a combination of the challenging ad market and poor programming outcomes,” CEO Hugh Marks said.

“However, we are taking positive steps to regain momentum in our ratings and revenue, with a well-advanced content plan for 2017 incorporating 50 per cent more premium local television content.”

Nine has also renegotiated a deal with Warner Bros to abandon its ‘life of series’ obligations.

The current “onerous” deal required Nine to purchase US drama and comedies  regardless of how they performed in the local market.

The new deal will rid it of this obligation for a fee, with contracts tipped to be formally signed next month.

“This agreement will require a further provision of $86m to be booked in the first half of FY17, the majority of which will be payable over FY18 and FY19,” Nine said.

“The agreement crystallises what would otherwise be a recurring liability, giving Nine certainty in relation to the obligation and increased flexibility in relation to future content spend.

“As a business we are incredibly focused on regaining momentum in ratings and revenue, with a well advanced content plan for 2017. 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.”

Source: The Australian, AdNews

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