Nine Entertainment Co AGM: Costello and Marks on Fairfax merger

Hugh Marks

• Marks – new-look Nine will ‘hit the ground running’ in December

Nine Entertainment Co chairman Peter Costello started the AGM in Sydney yesterday talking about the company’s audience growth on its various platforms. He also discussed the investment in Stan and 9Now.

But it was the Fairfax Media plans shareholders wanted to hear about and he eventually got to that, noting that early this year Nine approached Fairfax with the merger proposal.

He didn’t have much detail ahead of the Fairfax Media shareholder vote next Monday but he did say: “The combination of our businesses and our people will position us to deliver new opportunities and further innovation for our shareholders, staff and customers in the years ahead – effectively accelerating the actions we’ve been taking over the past few years to build the media business of the future.”

Chief executive Hugh Marks then had a little more detail about what the business should look like very soon:

The new Nine will have four principal areas of business, all of which are complementary to each other and all of which can work together to deliver better results than they can in isolation. Those segments are:

Broadcasting: A television business that has both successfully reshaped our relationships with advertisers through state of the art technology and innovative, premium offerings while repositioning our cost base to give us flexibility to respond to changes in the market.

Domain: With Nine’s proven ability as a brand builder, and Domain’s position in the property vertical, we believe that together we can take Domain to the next level. And while there are cyclical headwinds through this current property downturn, Domain continues to build a strong digital business with all of the key fundamentals now in place to rapidly grow market share with the commercial support and exposure Nine can bring. Nine has proven the power of its reach in building digital businesses in the past, and we will do it again with Domain.

Video On Demand: Nine’s VOD properties are both positioned in the segments of the market that are growing the fastest not only in Australia but globally. Video On Demand barely existed three years ago and Nine has done a great job to build two significant businesses across this period – one advertiser-backed and the other subscription.

9Now continued to grow its revenues in excess of 50% in the year to-date, with advertisers recognising the value of engaged audiences in a premium content environment, with non-skippable and now addressable advertising propositions. 9Now is already a scale business.

Stan is a domestic business that is the envy of our traditional competitors. The opportunity to consolidate ownership of 100% of Stan places Nine in a very strong position to take the next steps critical to accelerate.

Publishing: Fairfax has done a great job in moving its metro publishing business to a revenue model now driven more by subscription and circulation revenue than by advertising. And when combining the digital revenues of the existing Nine digital businesses (ex 9Now) and Fairfax’s digital revenue base, the combined publishing business will reach 8.1 million Australians each day and have a revenue base of more than $500 million – a proposition that from an advertising perspective will be very competitive with Facebook in the Australian market, but through a premium-content, brand-safe environment supported by world-class measurement.

With the benefits of Nine’s recent investments in Pedestrian, CarAdvice and Future Women, Fairfax’s new Google relationship driving revenue and profit growth into the future, and aided by clear synergies that will benefit this part of the business, the publishing arm of the merged entity will be a substantial business at scale.

Marks then revealed: “Our two companies have been working tirelessly behind the scenes since we made the initial announcement to ensure we will be able to hit the ground running before the end of this calendar year.”

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