Nine Entertainment has flagged cost cuts to its free-to-air businesses after a sharp drop in half year profit amid amid a weaker advertising market.
The publicly-listed media company reported net profit after tax for the six months to December 31 slid 41 per cent to $101.86 million.
However, the group’s revenues for the half-year increased by 65.7 per cent to $1.18 billion.
Chief executive Hugh Marks announced on Wednesday Nine would target the removal of up to $100 million in annualised free-to-air costs over the next three years.
These cuts would focus on international content including one-off sporting events such as the Ashes and Cricket World Cup.
He said these were “costs that will not inhibit our ability to continue to invest in the growth opportunities around premium revenue and digital video.”
Shares in the company jumped as much as 10 per cent on the news. By 1515 AEDT, Nine shares were still up 6.5 per cent at $1.72.
Nine also pared back its previous forecast for “low single digit growth” in full year group earnings and on Wednesday said it expects flat earnings, at a similar level to the last financial year.
Mr Marks said strong growth in its digital businesses were helping Nine offset some of the cyclical headwinds faced by its traditional media assets.
The chief executive said almost 40 per cent of Nine’s earnings were now sourced from growing digital platforms.
Nine’s video streaming service Stan increased its revenue by 79 per cent to $116.6 million, with subscribers exceeding 1.8 million.
It said Stan had consistently built subscribers across the half, driven primarily by its iconic series likes of Seinfeld, Friends, The Office, and Breaking Bad – as well as new content from Fox/Disney and Stan’s originals.
Average weekly viewing hours per subscriber increased by more than 25 per cent over the important summer weeks.
Another highlight for the media company was video-on-demand 9Now’s revenue growing by 65 per cent to $27.3 million.
Mr Marks said Nine expected both 9Now and Stand to enjoy continued growth into the second half.
“Nine is in a unique and incredibly exciting position,” Mr Marks said.
“We own platforms across linear television, digital, print and radio leading assets, and all of which are evolving towards digital distribution.”
Nine announced a fully-franked half-year dividend of five cents per share, the same as last year.
NINE HALF-YEAR PROFIT FALLS
* Net profit down 41pct to $101.86 mln
* Revenue up 65.7pct to $1.18 bln
* Fully-franked interim dividend of 5.0 cents a share, unchanged