Aussie cricket team slaughters Nine Network

$315 million wiped off value at NineNine shares slump after ad market warningComment: Nine searches for a multi-night hit to corral viewers

The Australian cricket team are serial killers. Not only did they slaughter the weaker West Indies, they murdered  Nine Network ratings and inflicted injury to its profit prospects.

The third victim was the Nine share price, which has now been crushed more than 20 per cent.

One would think the Australian team would have been more considerate than to beat the West Indies in quick time rather than take the five days allocated by the Nine Network over which they sold advertisements.

Yes, the super sporting ability of captain Steve Smith and Co, is primarily responsible for Nine’s disappointing ratings performance.

Nine says that the weather and the standard of the competition (read Aussies too good and West Indies not good enough) meant that a third of the scheduled days were lost.

In a generally good advertising market, a shorter-than-expected cricket game and a rain downpour would be disappointing but not a disclosable event.

But it’s a soft advertising market in an industry that is increasingly falling victim to rapid structural change.

In the free-to-air television industry everything needs to be going right for an operator – just in order to stand still. All the leverage is to the downside.

There is no room for an outperforming cricket team to upset a television company’s over optimistic forecasts.

Nine said Television revenues were down 11 per cent in the third quarter to March 2016 against the same period last year. That is a massive drop by any measure.

The only chance of treading water for the three players is to see ratings improvements.

And that is not going to happen at Nine, which on Tuesday noted it expected the ratings for calendar 2016 would be about 37 per cent. It had previously expected ratings to be 38 per cent.

Nine says the revenue performance was also hit by the absence of the Cricket World Cup event (which it had in 2015) and the early timing of Easter.

But is wasn’t all about cricket. Like most television networks Nine had its flops and during this period the poor performance of Reno Rumble didn’t help.

The pressure is now on Nine to get its costs down sufficiently to compensate for the worse-than-expected revenue result.

Certainly media analysts will be working on their corporate models – downgrading their expectations for Nine’s full-year result.

Two and a half years ago Nine listed on the ASX at $2.05 and has been a lousy investment for those who acquired shares in the IPO. At lunch on Tuesday it was trading at $1.20.

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