The Nine Entertainment Co has posted a $203m loss for the 2017 financial year after exiting a loss-making content deal with Warner Bros and writing down the value of its free-to-air television business.
Revenue was down to $1.23b from $1.28b in 2016 but profit before write-downs increased by 2.7% to $123m.
The “onerous” Warner Bros deal accounted for $87m of the loss and obliged Nine to buy Hollywood’s drama and comedy programs even if they didn’t suit its audience and performed badly.
NEC – which includes the television channels Nine, 9Go!, 9Gem and 9Life, catch-up TV service 9Now, streaming video-on-demand company Stan and digital properties nine.com.au, 9Honey and Pedestrian TV – reported a decline in television advertising revenue of 4.4%.
Nine reported the decline in revenue is largely due to the soft free-to-air market and the competition from the Olympics on Seven.
The total advertising market for free-to-air television declined by 3.5% in 2017 due to the shift in viewing habits away from broadcast TV towards paid on-demand television services such as Netflix.
On the positive side, Nine’s digital businesses are growing and the federal government abolished the licences fees paid by the commercial free-to-air networks, saving Nine $33m.
Nine’s share of the ratings grew with hit local shows Married at First Sight, Australian Ninja Warrior, Travel Guides, Hamish & Andy and This Time Next Year, hosted by Karl Stefanovic.
The NEC chief executive, Hugh Marks, welcomed a decision by the Australian Competition and Consumer Commission not to oppose a bid by billionaires Lachlan Murdoch and Bruce Gordon to buy Network Ten.
Marks said a “a viable Ten” was critical to the success of the media industry, whose biggest concern was the fragmentation of audiences rather than increased competition from a stronger Network Ten.
The ACCC said on Thursday that the proposal of Murdoch’s investment vehicle Illyria and Gordon’s Birketu to each acquire a 50% interest in Ten was “unlikely to result in a substantial lessening of competition in any relevant market”. However, the bid cannot precede until the Senate approves the changes to media ownership rules contained in the current legislative package.
Nine’s loss follows the reporting last week of rival Seven West Media’s $744m loss for the 2017 financial year. Marks said although the free-to-air business was under pressure, the company was expanding its interests in other areas of media and keeping costs down.
“The strategic work we did over the past 18 months to reshape our content offering has delivered outstanding results that will benefit our entire business in the mid-term,” Marks told investors.
“Our leadership position in key advertising demographics is continuing to strengthen as we progress through the calendar year. We are consistently growing advertising revenue share in FTA [free-to-air] television, on-demand television and digital publishing.
“With a strengthening balance sheet, and significant operational momentum and leverage, Nine enters the new financial year in a much stronger position. Our focus on creativity and content has never been clearer.
“The options available for us to monetise our content have never been more diverse. The media world of the future is video-based and we are right at the forefront of it in Australia.”
Stan is a joint venture between Nine and Fairfax Media.
