Nine Entertainment boss David Gyngell says his television network will build its business with a focus on local content, as the recently relisted company showed it is on track to beat its earnings forecasts.
Mr Gyngell was bullish about the Nine Network’s prospects as Nine Entertainment revealed a half year net profit of $31.7 million – the company’s first result since listing on the Australian Securities Exchange in December.
The Nine chief executive said his television network was aiming for a 40 per cent share of the metropolitan market free-to-air (FTA) advertising revenue by the end of 2015, up from 38.7 per cent currently.
He expects Seven to “do a very good job of defending their patch”, but dismissed low-rating rival Ten Network’s ability to provide competition.
“I do not believe that Channel Ten will get anywhere near like the share gains over the years to come that has been predicted,” he said.
Nine was moving to reduce its spending on overseas programming and increasing its investment in local content, he said.
An example was Nine’s new “Inside Story” current affairs program, which debuted with one million viewers on Wednesday night, and adds to the network’s existing hour-long news and A Current Affair.
“The benefits that a one-hour news and a half-hour of current affairs on the back can drive to this organisation – it is worth tens and tens of millions of dollars of advertising,” Mr Gyngell said.
Without a prior year to compare results with, much of Nine’s reporting was on a pro-forma basis, which accounted for changes in the company’s composition and one-off costs of $31 million related to the 2013 IPO.
Pro-forma net profit was $95.2 million, up from $76.6 million in the previous corresponding period, while pro-forma revenue was $845.6 million, compared with $773.4 million in the first half of 2012/13.
Mr Gyngell said he was confident of beating Nine’s prospectus earnings forecast of $305 million for the full year.
Nine’s events business, which includes Ticketek and Sydney’s Allphones Arena, posted earnings growth of 55 per cent to $40.1 million, thanks to better ticket sales and event attendances.
Nine’s digital media business suffered a 35 per cent drop in earnings to $13.7 million.
“On balance they’ve done an okay job – they’ve demonstrated that on an adjusted basis, the prospectus forecasts are capable of being met,” BBY analyst Mark McDonnell said.
However the reported earnings per share (EPS) of 3.9 cents compared unfavourably with Seven West Media’s EPS of 13.2 cents.
“They have narrowed the difference with Seven in terms of ratings and ad revenue share but on a comparative share price and dividend basis, their results highlight the relative attractiveness of Seven,” Mr McDonnell said.
Nine Entertainment shares gained one cent to $2.29.
