Outgoing Nine Entertainment Co chief executive Hugh Marks led his executive team at an Investor Strategy Day for major shareholders and investment banks on Thursday. The event comes just one week after the 2020 Annual General Meeting followed by Marks’ decision to stand down from his role after a company newspaper revealed a relationship with a senior staff member.
The event started with a summary of what Marks and his team have achieved over the past five years, with the key milestones the mergers with Fairfax Media and Macquarie Radio and the launch of BVOD on 9Now. The success makes it all the more puzzling why the board is searching for a replacement.
Hamish Turner on 9Now
One of Nine’s key players who helped steer the FTA channels to ratings victory again this year, Nine program director Hamish Turner, explained how the evolving future of TV sees Nine now offering free entertainment via video on demand and live TV via FTA and streams on 9Now.
Turner noted the average age of the Nine FTA viewer is 54, while the 9Now average age is 37. Regarding consumption of 9Now content, the average of catch-up content consumed has dropped from 82% to 44%, with Nine’s growing catalogue of digital exclusives up from 18% to 56% (March to September 2020). Nine now calls 9Now a destination VOD platform as it grows from being mainly a place to catch-up missed programming.
Michael Stephenson on VOZ
Nine’s chief sales officer Michael Stephenson reminded investors about Nine’s recent partnership with Adobe and how addressability will deliver higher TV ad return. He indicated Nine had a 40% share of the metro FTA market in FY2020 although revenue was down across the market $2.4b.
Nine has a 50% share of the BVOD market while that market was down $210m in FY2020.
Stephenson explained how Nine will benefit from the new Virtual Oz (VOZ) measurement of total TV audiences (FTA + BVOD) with test data indicating Nine’s audience is up 6.4% 18-39 when measuring both together.
Nine is expecting VOZ will grow the total TV market and that Nine will benefit from first party data which will increase share and CPM.
Mike Sneesby on Stan Originals
One of the two favoured internal candidates to take over as new Nine chief executive focused on the SVOD market at the Investor Day, telling guests the group expects the SVOD market could grow to more than 16m subscriptions by 2025, perhaps as many as 24m.
CEO Mike Sneesby presented chart of Stan’s growth from launch in 2015 to now that showed competitor activity at various points as Stan grew to it current size of 2.2m+ subscribers. It seems the more streaming players there are the faster Stan grows. In the two years post August 2018, Stan doubled its customer base, growing from 1.1m to 2.2m. It took three and a half years however for it to get to 1.1m. In addition to 2.2m+ active customers, Stan has a total of 6.1, active and inactive customers.
Sneesby reiterated a stronger focus on Stan Originals over the next five years.
Stan is planning to be busy growing its premium exclusive content. At present Stan has around 61 exclusive titles from 17 distributors targeted to grow to 150 exclusive titles in 2025.
People trialling the product remain happy with what is on offer with a 70% conversion rate from trial to paid.
Hugh Marks on total television earnings
Hugh Marks confirmed the trends he talked about for total television revenues at the AGM with a little more detail.
Nine is expecting 19% of TV earnings to come from Stan in 2024 and 38% from 9Now. That combined 57% will grow from 37% which is the stat as at June 2020. To get a handle on how quickly the TV business has transformed, Nine said FTA TV revenue as a percentage of total TV revenue will drop from 97% in 2017 to 43% in 2024.
Chris Janz on digital subscriptions focus at Metro Media
The other internal candidate for the role of CEO is chief digital and publishing officer Chris Janz who said the growth of reader revenue at the major metro news brands will jump from 53% in 2017 to 60% in 2021. In that period digital subscription revenue jumps from 12% to 25% of metro media revenue.
Janz said there remains a big potential for future growth with just 3% of the 12m Australians 14+ who visit the mastheads each month are subscribers.
The cost base at the metro brands has been reduced by 25% since 2017 with the money that is being spent on editorial aimed at driving subscriptions. Editorial costs as a percentage of overall costs is up from 25% to 33% in the past three years.
Other Nine executives presenting at the Investor Day were Nine Radio’s Tom Malone, MD of marketing Lizzie Young, Drive CEO Alex Parsons and CFO Maria Phillips.