The Nine (ASX:NEC) share price rising on third quarter update

The Nine Entertainment Co. Holdings Ltd (ASX: NEC) share price is flat on a well-rounded performance across traditional and digital segments
The post The Nine (ASX:NEC) share price rising on third quarter update appeared first on The Motley Fool Australia. –

The Nine Entertainment Co. Holdings Ltd (ASX: NEC) share price has provided key third-quarter updates as part of its presentation to the Macquarie Australia Conference. 

At the time of writing, the Nine Entertainment share price is trading for $2.85, up 0.71%. 

Nine third-quarter update

Nine estimates that by FY22, more than half its revenue will come from digital growth segments. This includes subscription and licensing such as Stan, marketplaces including its majority shareholding of Domain Holdings Australia Ltd (ASX: DHG), and online advertising.

To date, the company has made an impressive transition and investment into digital growth segments. At the same time, it has been building on its core broadcasting and traditional advertising businesses. 

Solid broadcasting performance 

Nine’s broadcasting segment contributed to approximately 53.5% of the Group’s revenue in 1H21. Free-to-air (FTA) television is a significant driver of this segment, responsible for 85% of broadcasting revenue. 

The trading update highlights a 6% increase on the prior corresponding period (pcp) for Metro FTA market revenue. While broadcast-video-on-demand (BVOD) market revenue was 50% higher with growth trends expected to continue into the fourth quarter. Despite the strong growth of BVOD, it is worth noting that these segments only contributed approximately 9% of overall broadcasting revenues in 1H21. 

Digital subscriptions driving publishing revenues 

Nine’s publishing segment contributed to 22% of the Group’s revenue in 1H21. This segment is heavily driven by the growth of digital revenues, whereas print-related growth has either plateaued or is in decline. 

Digital subscription revenue continued to grow strongly into the third quarter, up 20% on the prior corresponding period. The company has also clamped down on publishing costs, down double digits in FY21. 

Nine is notes that it is in advanced discussions with Google and Facebook

Streaming services growth consolidating

Nine reveals that subscriber numbers for its Stan streaming service is consolidating post-COVID. The plateauing near-term growth of streaming services should come as no surprise following Netflix’s disappointing first quarter earnings. Nine eyes the commencement of Stan Sports and deal with NBCUniversal content to drive medium term subscriber numbers. 

The update notes that second half earnings before interest, taxes, depreciation, and amortisation (EBITDA) will be lower than the first half due to content phasing. Stan delivered a 28% increase in revenue to $14.9.1 million in 1H21, or approximately 12.8% of Group revenue. 

Hot property market driving Domain earnings 

Digital revenue was up 8% and total revenue was up 2% in the third quarter. The update highlights that April’s new residential listings rebounded strongly from April 2020’s COVID-impacted base. Property indicators remain positive evidenced by record property search volumes, open home attendances, clearance rates, and new account creation at Domain Home Loans.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Nine (ASX:NEC) share price rising on third quarter update appeared first on The Motley Fool Australia.

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