Nine Entertainment, one of Australia’s leading media companies, has reported a significant decline in net profit for the full year. As the government considers providing support for free-to-air TV stations like Nine, the company’s profits slumped by 38% to $194 million. This news comes as streaming services continue to dominate the market, with consumers increasingly favoring digital platforms over traditional television.
Nine Entertainment’s annual earnings before interest, taxes, depreciation, and amortization (EBITDA) also took a hit, falling by 16% to $591.2 million compared to the previous financial year. The company cited increased broadcast costs as a contributing factor, which climbed by 7% to $1.36 billion. Additionally, EBITDA dropped by 20% to $319.5 million, and analysts predict that the cost of acquiring new content will further impact the business in the coming year.
In response to the declining advertising revenue generated by networks like Nine, the Labor Government is considering measures to prop up free-to-air TV stations. The proposed plan involves forcing streaming and TV brands to openly promote their declining services. However, critics argue that this move is driven more by political motivations and the Labor Government’s desire for influence in the media landscape than by a genuine commitment to allowing commercial businesses to compete openly.
While Nine Entertainment’s traditional TV business has struggled, its streaming service, Stan, has seen growth. Stan, which boasts nearly 2.6 million subscribers, experienced a 12% increase in revenue, reaching $427.6 million. However, the company’s efforts to compete with Foxtel through actions like investing more in Stan Sport have incurred costs, which rose by 11% to $390.5 million.
The publishing arm of Nine, which includes prominent newspapers like The Sydney Morning Herald and The Age, also faced challenges. It saw a 16% decline in advertising revenue during the latter half of the year as brands reduced their spending. Publishing revenue decreased by 4% to $575.2 million, while EBITDA fell by 8% to $164.7 million. Despite this, Nine CEO Mike Sneesby remains optimistic, noting that the company has implemented cost-cutting measures to adapt to the challenging economic environment.
However, concerns about the impact of artificial intelligence (AI) on the media industry persist. Sneesby emphasized the need for a comprehensive understanding of AI’s opportunities, potential threats, and risks associated with its accelerated rollout. As technology continues to advance, media companies like Nine must navigate the evolving landscape to stay competitive.
The current financial results highlight the shifting dynamics in the media industry, with streaming platforms gaining momentum while traditional TV and publishing face declining revenues. As the government deliberates on potential support for free-to-air TV stations, it remains to be seen how these measures will affect the market and the future of Australian media.
