Nine Entertainment Shares Tumbled On ASX After Releasing Its Trading Update

  • Oct 12, 2018 AEDT
  • Team Kalkine
Nine Entertainment Shares Tumbled On ASX After Releasing Its Trading Update

On 12 October 2018, Nine Entertainment Co. Holdings Limited (ASX: NEC) provided its trading update before the expected release of the Scheme booklet relating to the merger of Nine and Fairfax Media.  following this news, the share price of the company decreased by 12.857 percent as on 12 October 2018.

As per the trading update, the Metro FTA advertising market has been slightly softer than expected, however, the company’s share has been ahead since the end of FY18. September quarter’s digital revenues increased by 10 percent, but Metro FTA advertising revenues are broadly flat compared to Q1 of FY 2018. The company is expecting an EBITDA of FY 2019 to be in a range of $280 million to $300 million. 

In July 2018, Fairfax and Nine announced that they are planning a merger to pool the resources and enjoy the benefit of reduced cost while creating the broadcasting content for radio, television and online media platforms. It is expected that the merger will be finalized by the end of 2018.

In FY18, Nine Entertainment reported Group EBITDA of $257 million, which is an increase of 25 percent on FY 2017, driven by a 6 percent increase in Group revenues. The company increased its share of a Free- To- Air market which returned to growth over the year, underpinning the result. Importantly for the future of the business, Nine’s FTA growth was amplified by strong growth in 9Now and Digital Publishing. Net Profit after Tax and before Specific Items increased by 27 percent to $157 million compared to the FY 2017 results. On the same basis, earnings per share increased by 27 percent. Operating free cash flow for the year, before Specific Items, interest, and tax, was $243 million in FY 2018. Net Debt at 30 June 2018 was $121 million, which is less than $225 million of FY 2017. During the year, the company paid $87 million to shareholders through dividends, $125 million was received through the sale of the Group’s Willoughby premises, and nearly $100 million was invested in the business, including through Stan and Pedestrian.

During the year, the company entered into a partnership agreement with Tennis Australia for the broadcast rights to all premium tennis played in Australia for the 2019 to 2024 seasons. The Company is looking forward to the first broadcast of Australian Tennis in January 2019. The Metro television ads market returned to growth in FY 2018, while BVOD (Block Chain Video on Demand) continued to surge. Metro Free-To-Air revenues increased by 2.5 percent, which included a notable 3.8 percent increase in the second half while BVOD ad revenues increased 32 percent. With the strong support of Think TV, the medium’s unsurpassed ability to build a brand has again come to the fore.

In FY18, the company expanded its regional news coverage, gathering and producing news from 15 regional markets, for broadcast through its Southern Cross affiliation. This new initiative has brought more than 170,000 people in these regional markets to Nine’s local news services. Towards the end of FY18, the company acquired the outstanding 40 percent minority interest in Pedestrian TV. Pedestrian is Australia’s largest youth-focused publishing brand, with a monthly reach of more than 1 million Australians users in the age of between 16 and 35 years, a notoriously difficult to reach demographic.

In the past three months, the share price of the company decreased by 17 percent as on 11 October 2018. NEC’s share traded at $1.830 with a market capitalization of $1.83 billion as on 12 October 2018 (AEST 2:10 PM).

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