Nine shares slump after ad market warning

“Nine’s summer of cricket was adversely impacted both by the weather and the standard of the competition,” Nine said in a trading update. Photo: Cameron Spencer Nine’s television revenues were down 11 per cent in the third quarter of the final year. Photo: Louie Douvis
Nanjing Night Net

Reno Rumble has been a ratings disaster for Nine. Photo: Supplied

A dire summer of cricket with a below-par West Indies team and lots of wet weather, as well as a poor start to the ratings year that included the disastrous launch of Reno Rumble, have combined to deliver a serious blow to Nine Entertainment’s revenue and sent the company’s shares tumbling.

Nine’s television revenue was down 11 per cent in the third quarter of the financial year, compared with the corresponding period, which the company said was also affected by an earlier Easter and no Cricket World Cup.

Nine shares plunged 24.7 per cent to $1.14 in morning trade.

Following the conclusion of the third quarter, Nine said that the advertising market remained subdued in March.

“Nine’s ratings during the period were softer than anticipated, which has impacted [free-to-air] revenue share. In particular, Nine’s Summer of Cricket was adversely impacted both by the weather and the standard of the competition, with [circa] 30 per cent of scheduled play days lost,” Nine said in a statement to the Australian Securities Exchange.

Nine’s Reno Rumble debuted its second season on March 21 with just 395,000 metropolitan viewers, with rival Seven securing 1.46 million viewers for My Kitchen Rules.

After a week of poor ratings, Nine dropped the show from its 7.30pm timeslot, back to 8.50pm on Mondays and 8.40pm on Tuesdays. It is being replaced by a new season of Married at First Sight on Mondays and Tuesdays and back-to-back episodes of The Big Bang Theory on Wednesdays. In a bright spot for Nine, despite poor reviews, Daryl Somers’s new show, You’re Back in the Room launch on Sunday night with 1.65 million viewers nationally, and 1.16 million metropolitan viewers.

“The free-to-air advertising market is now expected to record a low single digit decline for FY16, versus our previous guidance of ‘flat to down marginally’. Reflecting the disappointing ratings start to 2016, Nine’s share is now expected to be [circa] 37 per cent for the year,” the statement says.

Nine had previously forecast to have FTA share of 38 per cent.

The company said that the trend in digital, which was double digital earnings growth in the first half, was expected to continue in the second half.

Nine flagged at its half-year results that it had begun a number of cost-cutting initiatives in order to combat the soft revenue environment. It forecasts that costs, excluding higher-than-expected legal costs from the second half, to be down 4 per cent for the financial year.

In an interview with Fairfax Media last week, Nine chief executive Hugh Marks said the metropolitan broadcaster was making good progress on cutting costs and flag that it was still looking at other areas of the business.

“$700 million of our $900 million cost base is in content. So getting efficiencies in our content spend, making sure we’re spending the right dollars on the right programs is really what the focus is,” Mr Marks said.

However, Mr Marks said he did not have any planned changes for senior programming people.

“I’m working with the team that we’ve got to make sure when we launch next year, we’ll launch with a much more competitive set of programming. The plan is certainly to improve,” he said.

“Would I have loved to have launched better? Yep. Will we get there next year? That’s my challenge now.”

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