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Nine Entertainment has returned to profit after last year’s coronavirus crisis and expects revenue to increase next year as the deals with Google and Facebook come into effect.
But the result disappointed the market, with stocks falling 7.7% on Wednesday morning after Nine fell short of earnings expectations.
The company reported an after-tax profit of $ 184 million for the 12 months ended June, down from a loss of $ 574 million the year before.
This compares to the market forecast of around $ 260 million, based on data from CommSec.
Revenues from television and streaming service Stan, which benefited from Covid lockdowns, were behind the turnaround.
Revenues from Nine’s newspaper titles, which include the Sydney Morning Herald and The Age, fell as print circulation and advertising continued their long-term decline, but the drop was more than offset by the increase digital subscriptions and $ 35 million costs the company snatched away. the division.
The company also benefited well from its 60% stake in real estate advertising group Domain, which performed well as Australia’s obsession with buying homes persisted despite the pandemic.
However, the radio, which includes Sydney’s 2GB right-hand station, was a black spot. Brands like 2GB are worthless after the company reduced the value of its business from $ 62 million to $ 129 million and said its only radio assets were its broadcast licenses.
Radio revenue fell from $ 9.8 million to just $ 8.4 million after revenue slump due to the sale of two companies within the division and a smaller share of the advertising market .
The company also suffered a cyberattack during the year that forced staff to scramble to distribute newsletters and newspapers in bed after key systems were locked down.
“No sensitive data was compromised in connection with this attempted breach and the financial impact on the business was not material,” the company said in its annual report.
Former CEO Hugh Marks, who left Nine in March after controversy over his personal life, was rewarded with a package worth $ 7.9 million. Approximately $ 4 million will be paid this year, including severance pay of $ 2.9 million.
This compares to the $ 2.3 million package he received the year before, which was his last full year as CEO.
Mike Sneesby, who replaced Marks as CEO, painted a rosy picture of the future.
“We will continue to focus on expanding our ownership and control of content, doubling Stan’s original volume in fiscal 22, combined with continued growth in live streaming and Stan Sport, ”he said.
“In publishing, continued growth in reader revenues, and more specifically digital subscription and license revenues, is essential.
“This will be achieved by focusing on the content that resonates most strongly with our current and potential subscriber base, as well as ensuring an optimal customer experience through continuous improvement and the functionality available in our applications. “
The company expects “strong near-term growth” in revenue at its masts as a result of the Google and Facebook deals, it said in its annual report.
However, Sneesby said revenue from the deals, which were obtained after the government threatened the tech giants with an enforceable code, would not be counted until next year.
He thanked the staff for their efforts over the past few weeks during the ongoing closures in Sydney and Melbourne.
“Time and time again, you have all found ways around these challenges and made sure that we meet the needs of our readers, listeners and viewers every day,” he said in an email to the all staff.
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