Nine blames social media as media monster explains 21 per cent profit fall

Nine chief executive Mike Sneesby has renewed calls for social media giants to pay more for using news stories after the broadcaster posted a 21 per cent fall in first-half profit.

Feb 22, 2024, updated Feb 22, 2024
Nine's new Chief Executive Mike Sneesby.

Nine's new Chief Executive Mike Sneesby.

The newspaper, TV and radio company blamed weaker economic and advertising conditions for net profit after tax slumping to $149.5 million for the six months to December 31.

The company has cut its fully franked interim dividend to four cents per share. Shareholders received six cents per share this time last year.

Mr Sneesby called on the government to do more to compensate media creators whose work helps social media giants attract users.

Social media companies have made more than 30 deals to compensate news publishers as per a government-mandated news media bargaining code.

But Mr Sneesby said the media landscape had evolved significantly since the code was drafted and required the government’s urgent attention.

Nine’s videos were driving huge audiences to social media, he said, while artificial intelligence services were being trained on public interest journalism.

The group’s biggest revenue source, its broadcast division, had a 9 per cent drop in sales to $654.6 million. This comprises TV and radio stations such as Sydney’s 2GB and Melbourne’s 3AW.

Earnings before interest, tax, depreciation and amortisation for the same category dropped 27 per cent.

One of the lowlights in the Nine accounts was a post-tax expense of $36 million.

This was mostly because of the write-down of a discontinued NBCUniversial Media contract and a contract to show the US Bachelor and Bachelorette series dating to 2002. The latter was onerous and had been written off for five years, Nine said.

The publishing division, which includes the Australian Financial Review, Drive and Pedestrian Group, had a 4 per cent sales slip. Costs increased by 3 per cent due to wage and printing cost inflation.

The group fared better with its Domain real estate properties and subscription TV service Stan.

Domain’s earnings before interest, tax, depreciation and amortisation jumped 32 per cent after more homeowners listed their properties for sale.

Stan’s earnings picked up by 41 per cent as subscriber numbers rose to more than 2.2 million.

Nine’s earnings were better than expected, according to Evans and Partners analyst Entcho Raykovski.

“This is a good result, but the outlook for TV into the second-half is more difficult than expected,” he said.

TV advertising revenue for the current quarter is forecast to be down by about 15 per cent on the same quarter last year.

Nine shares on the ASX were down 1.5 per cent to $1.81 at 11.02am (AEDT).

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