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Nine, Seven Provide Conflicting FTA TV Outlooks
BY GLENN DYER - 14/11/2017 | VIEW MORE ARTICLES BY GLENN DYER

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NEC - NINE ENTERTAINMENT CO. HOLDINGS LIMITED
SWM - SEVEN WEST MEDIA LIMITED


A take of two TV networks and their outlooks:

The mood was better at yesterday’s annual meeting of Nine Entertainment shareholders - better ratings, better revenue and earnings guidance on the up - a very different story to the news from rival Seven West Media at the start of this month with forecasts of weaker revenues, weak ads growth and a trim to its 2017-18 earnings guidance.

CEO, Hugh Marks told the meeting that the ad market for the first half of 2017-18 had been at the upper end of previous earnings guidance, while good ratings in recent months had lifted Nine’s share of the metropolitan TV ad market above 39%, compared to expectations of 37.5%.

He said programs like the new Australian Ninja Warrior, and favourites such as The Block (which had its best year for the past four), were the main drivers behind the network’s successful ratings.

“(The Block) delivered an average audience growth of more than 20 per cent across all demographics and remains one of our most profitable franchises,” Mr Marks said.

Mr Marks said Nine had made "significant inroads" in the past year, not only in its free-to-air sector but also in re-positioning its focus on the evolving $6 billion video advertising market which includes competitors YouTube, Facebook, Apple and Netflix.

“We aren't blind to the fact that audiences are fragmenting," Mr Marks said. The fact is the media that is on the rise is video and video is the thing that people are consuming.This is where Nine's premium content offers by far the most brand-safe and accountable environment for advertisers."

While Mr Marks confirmed second-half expectations had not changed, he said full-year earnings before interest, tax, depreciation and amortisation (EBITDA) were expected to be at the upper end of analyst forecasts of $204 million to $230 million.

"At this stage, in light of the expected revenue share gains in our metro television business and the flow through impact of this to 9Now, it seems likely that group EBITDA will be towards the upper end of this range," he said.

Seven originally forecast a 5% drop in Earnings before interest, tax, depreciation and amortisation (EBITDA) when releasing its 2016-17 results in August.

But CEO Tim Worner told the AGM on November 1:

"In terms of our financial outlook, we expect 2018 underlying EBIT to be in the range of $220m to $240m, which is in line with consensus. Looking beyond the 2018 financial year, we expect strong revenue growth from our 100% owned digital platforms,” Mr Worner said.

Seeing Seven reported an EBIT of $261 million in 2016-17, a 5% fall would have put that around $$250 million. Now there’s a range of between $220 million to $240 million - so a further cut of around 15% at the lower end of the range.

Unlike Seven, which is looking at falling EBIDA, Nine says it will be higher than the $205.6 million earned in 2016-17.

By June 30 next year, Seven could still be more profitable than Nine, but it will be close.

Nine shares rose 1% to $1.52, Seven West shares were up a touch at 62 cents.



View More Articles By Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



 

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