Nine Entertainment comments, September 19 for Channel 7

Jessica Amir wrote a column · 10 hours ago

Notes on Nine Entertainment $Nine Entertainment Co. Holdings Ltd (NEC.AU)$ Thursday September 19 2024 and shared with Channel 7

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How are they traveling?
- Nine Entertainment's CEO stood down after 3.5 years. In that time, its shares fell 57%.
- Nine now trades at $1.19, down 37% this year. It has lost $1.3 billion in market value (was a $3.2 billion company, now $1.89 billion).

Since COVID, it's lost $3.3 billion in market value. It's hard to believe it was a$ 5.2 billion company and now it's just $1.9 billion.

- This year, it's the worst-performing stock in the Media segment on the ASX.
- But the reason it's not seeing more selling is probably that it pays a dividend of about 6.8%.

What factors are at play that led to Nine's demise?
- Cultural issues are at play. And falling revenue.
- The major reason shares are struggling is it has been losing advertising dollars since post-COVID. It has not really adapted or focused on digital, which is where other media ASX players are gaining traction.

Fifty percent of Nine Entertainment's revenue is from broadcast, and that business is hardly growing revenue while it's grappling with rising costs. This is a big reason that Nine's earnings (EBIT) and net income have declined. This can be demonstrated in its shares. Remember that earnings growth drives share growth – so how can you expect its shares to move up unless big things change?

For the media sector at large – tough times ahead?
- Marketing budgets are not what they used to be. Budgets are down 15% from a year ago and have heavily fallen from the COVID peak.
- Think about the younger generation – how they are consuming media is via apps made by Meta, such as Instagram for example. The younger generation is also getting news from Alphabet's YouTube.

If you look at shares of tech/media businesses (Meta $Meta Platforms (META.US)$ etc.), they are chalk and cheese with traditional media players such as Nine, who are struggling to grow views and thus dollars.