Nine Entertainment’s television advertising revenue has grown for the first time in two and a half years as big name companies returned their brands to free-to-air TV.
Nine’s TV ad revenue jumped 10 per cent to $636 million in the six months to December, as it took a larger share of overall free-to-air market revenue, which rose 1.4 per cent.
That growth signals a rare halt in the long decline that has occurred in the free-to-air TV ad market as ad dollars flow instead to Facebook and Google, and viewers switch to streaming services such as Netflix..
Nine chief executive Hugh Marks said big brands such as Apple, Google, BHP Billiton and the major banks had returned to free-to-air TV.
“Advertisers will tell me that television is expensive but it works and that is just something I am getting consistently,” Mr Marks told AAP.
Nine’s dominant share of ad revenue, driven by strong ratings, particularly for The Block and nightly news, drove a 55 per cent increase in half year profit, excluding one-off items, to $116.2 million.
Shares in Nine gained 27.5 cents, or 16.2 per cent, to a two-and-a-half year high of $1.97.
Nine’s net profit, which included a $58 million benefit from the sale of the former site of its Sydney TV studios, was $174 million, up from a $237 million loss in the prior corresponding period when the broadcaster wrote down the value of its free-to-air television business.
Nine expects its strong ratings performance to continue in the second half of the financial year, and its revenue share to be higher than in the same period a year ago, though it said that growth will be limited by the impact of the Winter Olympics and Commonwealth Games on the rival Seven Network.
Nine’s digital business, which includes its 9Now on-demand streaming service and websites including PedestrianTV and CarAdvice, also posted revenue and earnings growth in the first half.
Mr Marks said streaming service Stan, a joint venture between Nine and Fairfax Media, is getting “pretty close” to the break-even mark after three years of losses.
Stan now has around 930,000 subscribers, and its revenue in the half was up 83 per cent from a year ago.
“I think this new world of television is a rapid and growing part of the market that we absolutely need to be apart of,” Mr Marks said.
“So it was a really important decision and we are seeing the dividends now.”
NINE SWINGS BACK TO PROFIT
* Half year net profit of $174m, vs $236.9m loss
* Revenue up 9pct to $723.85m
* Fully franked interim dividend up 0.5 cents to 5 cents