Nine Entertainment Co has become the first local media company to upgrade earnings guidance since the coronavirus pandemic began after experiencing a spike in advertising revenue in the lead-up to Christmas.
The television, radio and publishing company told the ASX on Thursday morning it expects a 40 per cent uptick in earnings before interest, tax, depreciation and amortisation before specific items in the first half to December 31, compared to $251 million in the previous corresponding period.
The upgrade is 10 percentage points higher than what was indicated at the company’s annual general meeting in November and signals a recovery of the advertising market, which fell to record lows earlier this year.
Nine, which owns The Sydney Morning Herald and The Age, said it now expects revenue for the television division to be up 1 per cent from the first half of last financial year. The company said it was not in a position to provide full-year guidance, but would have more visibility at its half-year results in February.
Media companies like Nine have had a challenging year because of the sharp fall in advertising spending caused by factors linked to the coronavirus pandemic. Nine accelerated cost cuts in its television division, suspended a small number of print titles and renegotiated a broadcast rights deal with the NRL. Other companies such as Seven West Media and Southern Cross Austereo were forced to renegotiate deals with their banks, raise capital or cut jobs. News Corp Australia, which owns The Australian, The Daily Telegraph and The Herald Sun stopped printing hundreds of regional and community newspapers.
Nine and Seven also looked at selling their transmission tower business, TX Australia, but those plans have since stalled.
The improvement in Nine’s earnings follows the announcement in November that the company would try and reduce total costs by $230 million until 2024, largely by moving all staff into the North Sydney headquarters. Nine’s share price climbed to a two-year high after the annual general meeting last month, which also discussed plans for the launch of new sports video streaming product, Stan Sport. The upgrade follows the resignation of Nine chief executive Hugh Marks, who is staying with the company until a replacement is found.
Nine’s shares rose more than 4 per cent to a peak of $2.47 in early morning trading on Thursday.
A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up here.
Source: Thanks smh.com