Nine Entertainment Co Holdings Ltd (ASX: NEC) announced that its FY21 first half earnings are expected to increase 30% on a rebound in advertising revenues. The Nine share price has jumped up 7.42% to $2.54 following the annual general meeting (AGM) announcement.
What are some highlights from the AGM
Nine advised that since the third quarter, its free-to-air advertising (FTA) market share had risen due to major events such as the State of Origin and NRL finals. Its fourth quarter results are now expected to show growth in FTA advertising revenue of around 15%.
Digital revenue for the period to 31 October is up by around 4% underpinned by Domain’s strong performance, with total group revenue down 7%.
Nine says FY21 first-half earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be up by around 30% compared to the previous corresponding period.
Nine chief executive Hugh Marks welcomed the results, saying:
We are certainly trading more positively than we would have anticipated just three months ago and are very pleased with the operating performance and trends in each of our business units.
Despite this, given our limited visibility on the second half advertising market, we do not believe we are in a position to provide guidance on earnings for the full year. We expect to be in a better position to address this at our half year results in February.
Growth opportunities
According to its financial report, Nine generates 90% of its earnings from its Nine Network channel – one of only three television channels licensed to broadcast free-to-air in Australia. The total market for free-to-air advertising is $2.7 billion, of which Nine commands the number one position at 39%.
This market is gradually dwindling as advertisers move to digital platforms. However, management said Nine’s investments in digital platforms such as 9Now, Stan, and Domain had gradually increased its market share in the fragmented digital market. That’s where it expects to see future growth.
The Nine share price performance in 2020
Nine’s share price has been on the rise in 2020, gaining more than 40%. Nine’s share price is currently trading at $2.52, up by 7%. It commands a market cap of $3.8 billion.
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