The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price is moving higher today after the business provided a trading update for the first four months of FY22.
At the time of writing, the Nine share price is up 4.7% to $3.10.
Nine Entertainment owns the Nine free-to-air network channel, Nine radio, Stan and a 60% stake in Domain Holdings Australia Ltd (ASX: DHG).
It also owns publications including The Australian Financial Review, Sydney Morning Herald and The Age.
Shift to digital spurs growth
Notable highlights from the start to FY22 include:
- First-half ad revenue up 6% year-on-year (YoY) and 6% on pre-pandemic 2019 levels
- 9Now – its streaming segment – revenue up more than 45% off a doubling in viewer numbers
- Publishing revenue up 10% YoY, earnings guidance upgraded
- Domain revenue up 18% YoY
- Cost growth below the 3% previously cited, despite an additional $5 million in one-off pandemic costs
- First-half EBITDA guidance of 10% growth
Management cited changing consumer preferences as the driver of growth.
For example, 9Now, originally a catch-up service for viewers to watch shows they had missed is now a growing part of how content is distributed.
A similar trend is evident in publishing, with digital subscriptions driving growth.
Firing on all cylinders
In 2021, Nine television achieved first place across its targeted demographics including the 25-54 age bracket, 16-39 age bracket and grocery buyers with children.
This momentum has carried into Q1, with revenue up 20% compared to the prior year. It’s been a more difficult start to Q2, with prior year-comps markedly increasing.
Radio remains robust, with 10% growth expected off record survey results.
Stan has benefitted from lockdowns in New South Wales and Victoria, however, subscriber growth is moderating as restrictions ease.
Management remains optimistic on Domain heading into the peak Spring selling season.
Publishing has benefitted from revenue derived from deals with Facebook and Google.
Subsequently, publishing EBITDA has been upgraded to $40-45 million from $30-40 million.
My take
It wasn’t long ago that analysts (including this author) were calling for the end of traditional media companies as online consumption rocketed.
The shift to digital was correct. But Nine has managed to adapt and subsequently record growth.
Competitor News Corporation (ASX: NWS) recorded a similarly strong start to FY22 last week.
A great result for Nine. It will be interesting to see if trends remain or shift again as customers move into a post-pandemic world.
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