Nine Entertainment
(ASX:NEC) has become the latest addition to the growing list of companies reducing their dividends during this June 30 reporting season. This move follows a decrease in full-year revenue and earnings due to challenges faced by the TV, radio, and newspaper advertising markets in the latter half of the year.
The final dividend has been lowered to 5 cents per share from the previous 7 cents, following an interim reduction of one cent per share to 6 cents. The total payout for 2022-23 of 11 cents per share reflects a substantial 21% decline, with a drop of 3 cents per share.
This disappointing result was further impacted by an $85 million impairment, attributed to the devaluation of radio licenses and other assets. This impairment suggests concerns about the future prospects of Nine's radio division, particularly 2GB in Sydney and 3AW in Melbourne.
Consequently, the company's statutory net profit plummeted by 38% to $195 million for the year, despite maintaining steady revenue of $2.7 billion.
The full-year operating earnings, excluding one-off charges, experienced a 16% decrease to $591.2 million, aligning with management projections. Similarly, net profit after tax but prior to one-offs saw a significant drop of 25% to $279 million.
Nine Entertainment's profit decline was consistent with the performance of its competitors, as Seven West Media recorded an 18.2% decrease in full-year profits, and Southern Cross Austereo experienced a 20.1% drop. In contrast, Seven did not distribute a dividend, while Southern Cross reduced its full-year payout to 6.8 cents per share from the previous year's 9.25 cents per share.
While below the earnings of the previous year, Nine emphasized that the result, excluding the exceptional charges, marked its second-strongest performance since re-listing on the ASX in 2013.
Looking forward, the company noted that trading in the new financial year, which commenced on July 1, has exhibited continuity with the preceding year's trends. The advertising market, particularly in free-to-air television, digital display, and print publishing, remains sluggish. Despite these challenges, Nine stated that it continues to outperform in all operating segments.
CEO Mike Sneesby highlighted the exceptional performance of Nine's television business, including its free-to-air channels and 9Now streaming service, achieving record revenue share outcomes. He emphasized Nine's commitment to staying at the forefront of Australia's rapidly evolving media landscape through premium content, broad distribution capabilities, and a robust balance sheet.
In terms of business segments, Nine's broadcast revenue experienced a 1% decline to $1.36 billion, while costs surged by 7%, resulting in a 20% reduction in EBITDA to $319.5 million. This decline was primarily attributed to the 11% drop in the metro free-to-air advertising market over the year and a 15% decrease in the June half.
On a positive note, streaming service Stan demonstrated robust performance with a 12% increase in revenue and a 30% rise in earnings to $37.1 million, despite an 11% rise in costs due to increased sports spending. Stan reported an active subscriber base approaching 2.6 million.
The publishing segment, which includes The Sydney Morning Herald, The Age, and The Australian Financial Review, experienced a 3% decline in revenue to $575.2 million. Earnings also dipped by 8% to $164.7 million, primarily due to a softer second-half advertising market. Despite this, total subscription revenue grew by 3%, with over 460,000 active subscribers across the publications.
Domain, the property listings business owned 48% by Nine, reported a 1% decrease in revenue, a 10% rise in costs, and a 13% reduction in EBITDA to $108.6 million.
