Nine Entertainment is entering a new chapter after selling its online real estate platform Domain to US property conglomerate CoStar. The sale is expected to leave the company with a $150 million cash pile, after paying shareholders a special dividend, raising expectations it will hunt for acquisitions.
Nine, which merged with Fairfax Media in 2018, owns assets including its flagship television network, radio stations 2GB, 3AW, 4BC and 6PR, streaming service Stan, and mastheads the Sydney Morning Herald, the Age and the Australian Financial Review. Its biggest challenge, according to Omkar Joshi of Opal Capital Management, is addressing the profitability of its television network, given it is Nine’s biggest revenue earner and the free-to-air TV market is in structural decline.
Joshi suggests Nine may look to buy an “out-of-home” advertising company, given the growth in demand for digital billboards. “Outdoor media could be something that they take seriously and look to buy in that space with oOh!media one of the potential names of interest,” he says. One fund manager, who asked not to be identified, hopes Nine does not buy more radio stations, noting that media acquisitions often overpay and fail to deliver expected results.
Nine’s streaming platform Stan has methodically increased revenue year after year, and its recent purchase of broadcast rights to the Premier League shows how invested Nine is in growing the platform. However, generating healthy profits from paid streaming services remains challenging due to the need for continual investment in content and promotion. Nine’s mastheads have found a way forward with their subscription model, but the company faces headwinds from the structural decline of traditional media.
