Nine Entertainment has told investors to expect a lower first-half result after revenues were hit by a continuing decline in free-to-air TV advertising and the high-profile boycott of Alan Jones’ 2GB radio show.
Chief executive Hugh Marks told Nine’s annual general meeting on Tuesday that TV ad revenue fell by 6.4 per cent in the first quarter, with a second-quarter drop of at least as much expected.
Its radio division has also experienced soft market conditions and advertiser flight from Mr Jones following outcry over his suggestion Prime Minister Scott Morrison “shove a sock down the throat” of New Zealand counterpart Jacinda Ardern.
Shares in Nine slumped 7.9 per cent to a six-month low $1.70 in early trade on Tuesday, and were still 5.83 per cent lower at $1.7375 by 1330 AEDT.
Mr Marks said signs of a hoped-for second-quarter improvement had dissipated and that the entertainment conglomerate expects the overall metro free-to-air TV market to decline by mid-single digits across the full year.
“There was always going to be a shift in earnings contribution in this financial year due to timing issues, particularly the one-off costs in the TV business,” Mr Marks said.
“However, the current advertising market conditions will mean that our first half result is now expected to be approximately 10 per cent down on pcp (prior corresponding period).”
Mr Marks said weak consumer sentiment was driving poor trading conditions for many consumer-facing businesses and, as such, general softness in the overall advertising market.
For Nine, advertising from nearly every major category was weak in the September quarter, particularly from auto, government, domestic banks and gambling.
Nine declined to detail the overall cost of the Alan Jones boycott, or how many advertisers had pulled out, after the broadcaster suggested Prime Minister Scott Morrison ‘shove a sock down the throat’ of New Zealand counterpart Jacinda Ardern in August.
Despite a reported 80-plus advertisers pulling their money from Mr Jones’ show amid consumer pressure, and a slight dip in ratings, audience figures released by GfK on Tuesday showed he retained his top rating spot on the Sydney airwaves.
“The owners and the station have to make sure he is within the laws of defamation and common decency,” chairman Peter Costello said.
Shareholders also expressed concerns about the potential reputational damage to Nine’s news mastheads after the company hosted a Liberal party fundraiser in September, something which Mr Costello said would not be repeated.
Mr Marks was quizzed on whether Sydney Morning Herald editors were told to prioritise an ‘exclusive’ front page story on Saturday on the reappointment of host Karl Stefanovic to Nine’s Today show, over the catastrophic bushfires in NSW.
“Neither Peter or myself know about editor’s choices what they made that day.. I haven’t spoken to the editor about the coverage on that day,” Mr Marks said.
“Will the editors get it right every time? No, they’re all human”
But Nine said digital streaming service Stan had been profitable in both earnings and cash flow in every month since March, putting it on track for a positive full-year contribution.
The company’s remuneration report received 99.5 per cent of proxy votes in favour, meaning it is certain to be passed.