Nine Entertainment’s Shares Down Due To Market Speculation Regarding The Acquisition Of Macquarie Media

On 5 December 2018, Nine Entertainment Co. Holdings Limited (ASX: NEC) released a statement in response to a report which is published in The Australian relating to the acquisition by Nine of Macquarie Media (ASX: MRN). In the response, the company has confirmed that it has had some preliminary discussions regarding the outstanding shares in MRN. Following the release of this news, the share price of the company decreased by 6.25 percent as on 5 December 2018.

Currently, Nine Entertainment is in the process of getting merged with Fairfax Media. In July 2018, Nine Entertainment and Fairfax Media announced that both the companies have agreed to merge to establish Nine as one of Australia’s leading independent media companies. Recently, the Federal Court of Australia gave its approval for this proposed merger.

Macquarie Media which is in the talks of getting acquired by Nine Entertainment has performed well in FY 2018. In FY 2018, Macquarie Media performance was very strong with Underlying EBITDA increasing by 10 percent to $32.4 million as compared to last year. The Underlying Net Profit After Tax of Macquarie increased by 24% to $21.5 million in FY 2018 compared to the corresponding year.

In the financial year 2018, Nine Entertainment experienced growth in its audiences across Free To Air TV, Broadcast Video on Demand (BVOD), Subscription Video on Demand. The overall revenues of the company increased by 6 percent and the Group’s EBITDA increased by 25 percent in FY 2018. Nine Digital recorded an EBITDA of $34 million in FY 2018 which is 18% higher than the last year. During the Financial year 2018, Nine 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. Nine’s Free To Air TV ratings showed steady growth across FY 2018. The company focused effectively on improving the monetization of its content, both in terms of premium revenue and cross-platform opportunities. This drove Nine to the number one revenue share position for both the first half of FY18 and the financial year as a whole, for the first time in 12 years. Over the past two years, the company is actively investing in its technology and systems. Nine has completed and rolled out Australia’s first automated trading platform, Galaxy, and the early results in terms of ease, efficiency and inventory optimization have been very pleasing.

In the first quarter of FY 2019, the Nine’s Metro FTA advertising revenues were broadly flat as compared to the first quarter of last year, adjusted for the one less week in FY19. For FY 2019, the company is expecting to report group EBITDA of between $280 million and $300 million on a standalone basis.

In the last six months, the share price of Nine decreased by 25.11 percent as on 4 December 2018. NEC’s shares traded at 1.650 with a market capitalization of circa $1.53 billion as on 5 December 2018 (AEST 2:33 PM).


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