Nine Entertainment Co. Holdings Ltd (ASX: NEC) has announced the sale of its Australian Commercial Media and Printing business this morning, together with a new agreement with the buyer.
Nine is one of Australia’s most well-known media companies, and with their merger with Fairfax Media in December 2018 they also became Australia’s largest locally owned media company. Some of their assets include the Nine Network, The Sydney Morning Herald, The Age, Australian Financial Review, CarAdvice and Stan.
Sale of “Non-core businesses”
Nine announced that the cash proceeds from the sale of its Australian Commercial Media and Printing business is expected to be around $115 million.
The business is being sold to a, “company controlled by interests associated with Antony Catalano and Thorney Investment Group” subject to customary terms.
On top of the $115 million in cash proceeds, Nine will also receive up to $10 million of advertising on ACM properties for three years post the completion date of 30th June 2019.
The funds received from the transaction are expected to be used to pay down debt that the company holds. In the latest annual report, Nine’s net debt was reported to be $121.3 million (as of 30th June 2018).
Chief Executive Officer Hugh Marks said that the sale of ACM fits with Nine’s ongoing strategy to exit non-core businesses and focus on digital assets.
“The sale of ACM is aligned with our strategy to exit non-core businesses and to focus on Nine’s portfolio of high-growth, digital assets”, he said.
“We will retain a commercial relationship with ACM and look forward to continuing work with the business in areas where there are mutual benefits to both Nine and ACM.”
How Has This Affected Nine’s Share Price?
The effect on the Nine share price has been minimal, with the shares opening slightly higher this morning. Over the last six months, the shares have risen about 4.8% while over a one-year period they have fallen 26%.
Nine faces a lot of challenges with the huge transition that’s occurring from print to digital media and other formats like video and audio.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.