1 00:00:05,600 --> 00:00:09,400 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Alma. Yesterday, 2 00:00:09,480 --> 00:00:12,840 Speaker 1: Nine Entertainment released it's half year results, reporting a jump 3 00:00:13,080 --> 00:00:16,560 Speaker 1: in its subscription businesses and an increase in revenue, but 4 00:00:16,800 --> 00:00:19,279 Speaker 1: a twenty five percent drop in net profit. But even 5 00:00:19,280 --> 00:00:22,080 Speaker 1: that number, which came after with the withdrawal of money 6 00:00:22,120 --> 00:00:25,520 Speaker 1: from Meta for local news content, was higher than expectations, 7 00:00:25,520 --> 00:00:29,560 Speaker 1: sending nine's share price higher. Much of the attention is 8 00:00:29,560 --> 00:00:32,320 Speaker 1: not on the company's core media business, though, it's on 9 00:00:32,360 --> 00:00:35,160 Speaker 1: the future of real estate platform Domain. Late last week, 10 00:00:35,240 --> 00:00:37,760 Speaker 1: US real estate giant Costar made a two point seven 11 00:00:37,800 --> 00:00:40,360 Speaker 1: billion dollar bit for Domain, which is six percent owned 12 00:00:40,360 --> 00:00:43,000 Speaker 1: by nine. The pressure is now on the nine board 13 00:00:43,000 --> 00:00:44,919 Speaker 1: to make a decision in the midst of a challenging 14 00:00:45,000 --> 00:00:48,640 Speaker 1: advertising market and the unrelenting pressure of the digital giants 15 00:00:48,760 --> 00:00:52,600 Speaker 1: like Meta and Google, because if it does sell, it 16 00:00:52,680 --> 00:00:56,200 Speaker 1: could be the start of an unraveling of Nine, Australia's 17 00:00:56,200 --> 00:00:59,279 Speaker 1: biggest media company. Tim Burrows is the co owner and 18 00:00:59,360 --> 00:01:03,720 Speaker 1: publisher of media and marketing industry site Umbrella Team Out. 19 00:01:03,760 --> 00:01:05,880 Speaker 1: Welcome back to Fear and Greed, Sean. 20 00:01:05,880 --> 00:01:08,280 Speaker 2: It's always a pleasure and never ature. 21 00:01:10,840 --> 00:01:14,440 Speaker 1: With the straight face as well, first to the nine results, 22 00:01:14,440 --> 00:01:17,720 Speaker 1: the least interesting thing in some ways about what's going 23 00:01:17,760 --> 00:01:20,080 Speaker 1: on at the moment. What did you make of nine's performance? 24 00:01:20,720 --> 00:01:23,600 Speaker 2: Hey, look, I suppose there wasn't a great surprise that 25 00:01:23,640 --> 00:01:27,440 Speaker 2: revenue was broadly flat. And let's remember this as an 26 00:01:27,520 --> 00:01:29,480 Speaker 2: organization for as much as we talk about the problems 27 00:01:29,480 --> 00:01:32,640 Speaker 2: of television, you know, one point four billion dollars in 28 00:01:32,680 --> 00:01:35,119 Speaker 2: the half, that's not nothing. You know, TV is still 29 00:01:35,280 --> 00:01:38,000 Speaker 2: quite a good business to be in. But as you say, 30 00:01:38,040 --> 00:01:42,160 Speaker 2: because costs were up a bit, then overall profits were 31 00:01:42,240 --> 00:01:45,760 Speaker 2: down something like fifteen percent, which was not unexpected. You know, 32 00:01:45,800 --> 00:01:49,080 Speaker 2: I think nine without the Olympics would have looked quite 33 00:01:49,120 --> 00:01:52,680 Speaker 2: a different picture. But overall nothing nothing to start a 34 00:01:52,760 --> 00:01:54,480 Speaker 2: riot and nothing to stop a riot. 35 00:01:54,880 --> 00:01:58,000 Speaker 1: Right, and the Olympics, they the cost base of the 36 00:01:58,000 --> 00:01:59,800 Speaker 1: Olympics is the problem there, I presume. 37 00:02:00,320 --> 00:02:03,160 Speaker 2: Yeah, Look, but both sides. I suppose a cost base 38 00:02:03,200 --> 00:02:05,560 Speaker 2: of the Olympics, which they do tend to average out 39 00:02:05,600 --> 00:02:08,400 Speaker 2: across the whole. I think it was a twelve year deal, 40 00:02:08,800 --> 00:02:12,880 Speaker 2: but also of course an opportunity to deliver bigger audiences, 41 00:02:12,919 --> 00:02:17,200 Speaker 2: particularly around streaming video, which which performs strongly, and of 42 00:02:17,240 --> 00:02:20,919 Speaker 2: course that means the opportunity to write a new advertising 43 00:02:20,919 --> 00:02:24,720 Speaker 2: and sponsorship revenue as well. So overall, it feels like 44 00:02:24,840 --> 00:02:26,960 Speaker 2: it was a good Olympics for nine when you take 45 00:02:26,960 --> 00:02:29,400 Speaker 2: into account both the costs and the revenue. 46 00:02:29,800 --> 00:02:32,560 Speaker 1: IK, team, let's get on to the good stuff. Will 47 00:02:32,800 --> 00:02:35,520 Speaker 1: nine sell it's sixty percent share of domain? 48 00:02:36,880 --> 00:02:39,120 Speaker 2: I think they have to. I think it will be 49 00:02:39,400 --> 00:02:42,960 Speaker 2: so hard for them to decline the offer as far 50 00:02:43,000 --> 00:02:47,400 Speaker 2: as shareholders go. The only thing that would change matters 51 00:02:47,400 --> 00:02:50,799 Speaker 2: would be if another bidder emerged, which I'm sure they're 52 00:02:50,840 --> 00:02:53,080 Speaker 2: out there kind of shaking the bushes at the moment 53 00:02:53,280 --> 00:02:57,000 Speaker 2: trying to create some competitive tension. But yeah, it feels 54 00:02:57,040 --> 00:02:59,600 Speaker 2: like it is a decent offer, you know, even after 55 00:02:59,639 --> 00:03:03,799 Speaker 2: it was used to pay down Nine's debt. That probably 56 00:03:03,840 --> 00:03:07,040 Speaker 2: then leaves nine with a war chest of something like 57 00:03:07,080 --> 00:03:10,520 Speaker 2: a billion dollars, And then it becomes really interesting what 58 00:03:10,560 --> 00:03:12,160 Speaker 2: do they do with that? Do they return it to 59 00:03:12,200 --> 00:03:16,760 Speaker 2: the shareholders or do they go again and reinvest and 60 00:03:16,880 --> 00:03:18,400 Speaker 2: change the shape of the organization. 61 00:03:19,040 --> 00:03:22,400 Speaker 1: So, just before we get to that domain, it hasn't 62 00:03:22,400 --> 00:03:27,639 Speaker 1: been a particularly strongly performing stock itself though, because nine 63 00:03:27,720 --> 00:03:29,640 Speaker 1: OO is such a big chunk of it, and because 64 00:03:29,639 --> 00:03:32,000 Speaker 1: the price is so high as you say, it's going 65 00:03:32,080 --> 00:03:33,919 Speaker 1: to be difficult for them to knock it back. If 66 00:03:33,919 --> 00:03:36,200 Speaker 1: they knocked it back, though, why would they knock it back? 67 00:03:37,080 --> 00:03:39,920 Speaker 2: I guess by the way, my assumption is they will 68 00:03:39,960 --> 00:03:42,640 Speaker 2: knock it back first time around. It's just because that's 69 00:03:42,640 --> 00:03:44,440 Speaker 2: how these things seem to go. You have to say, 70 00:03:44,680 --> 00:03:47,040 Speaker 2: it's almost a dance. You have to say, I'm sorry, 71 00:03:47,040 --> 00:03:49,720 Speaker 2: that's not enough value. And I think that would be 72 00:03:49,720 --> 00:03:52,080 Speaker 2: the only reason they would knock it back would be 73 00:03:52,080 --> 00:03:56,240 Speaker 2: a value thing. Clearly, the temptation for a really confident 74 00:03:56,280 --> 00:03:59,000 Speaker 2: board would be to say, this is such an important 75 00:03:59,040 --> 00:04:01,560 Speaker 2: part of our future, that it's such an important part 76 00:04:01,600 --> 00:04:04,080 Speaker 2: of the mix, we just can't let it go. I 77 00:04:04,080 --> 00:04:07,000 Speaker 2: think the problem at the moment in that is that 78 00:04:07,560 --> 00:04:10,400 Speaker 2: it doesn't seem to inherently add to the valuation of 79 00:04:10,440 --> 00:04:13,080 Speaker 2: the business as a whole. You know, it just sits 80 00:04:13,080 --> 00:04:17,120 Speaker 2: there on the balance sheet, doesn't necessarily make one plus 81 00:04:17,200 --> 00:04:20,960 Speaker 2: one equal any more than two. So I think that 82 00:04:21,000 --> 00:04:23,159 Speaker 2: then just becomes so why wouldn't you take the money 83 00:04:23,160 --> 00:04:24,120 Speaker 2: while it's on the table? 84 00:04:24,440 --> 00:04:29,400 Speaker 1: Okay, So if that goes ahead, what then happens to nine? 85 00:04:29,480 --> 00:04:31,920 Speaker 1: Because there's talk of them trying to sell their radio 86 00:04:31,960 --> 00:04:38,160 Speaker 1: stations as well publishing and broadcast legacy sectors stand has 87 00:04:38,200 --> 00:04:40,839 Speaker 1: done very well, but a very crowded market. What does 88 00:04:40,880 --> 00:04:42,800 Speaker 1: become of nine if domain's not there? 89 00:04:43,839 --> 00:04:48,359 Speaker 2: That becomes such an interesting question. Definitely, it feels like 90 00:04:48,720 --> 00:04:53,520 Speaker 2: a chance to recast what nine stands for. It creates 91 00:04:53,560 --> 00:04:57,040 Speaker 2: a pot of money to reinvent the business and probably 92 00:04:57,080 --> 00:05:00,000 Speaker 2: what that money should then be spent on is gross 93 00:05:00,560 --> 00:05:04,719 Speaker 2: media or growth mediums. So I would find myself wondering 94 00:05:05,200 --> 00:05:08,960 Speaker 2: would they, for instance, invest in an outdoor advertising company, 95 00:05:09,040 --> 00:05:13,720 Speaker 2: so that could be if so the ASX listed OH 96 00:05:13,839 --> 00:05:18,680 Speaker 2: Media maybe or perhaps their biggest competitor, QMS, which is 97 00:05:18,920 --> 00:05:25,160 Speaker 2: owned by Quadrant, so that's that's in private hands, so 98 00:05:25,200 --> 00:05:28,960 Speaker 2: that will be one possibility. Another one is to double 99 00:05:29,040 --> 00:05:32,280 Speaker 2: down on I won't use the word television. Let's say 100 00:05:32,400 --> 00:05:37,640 Speaker 2: video is reasonedly well known in the market that Optus 101 00:05:37,760 --> 00:05:40,600 Speaker 2: is looking to exit from opt to sport. You would 102 00:05:40,640 --> 00:05:44,800 Speaker 2: think that that football as in soccer offering would be 103 00:05:44,960 --> 00:05:49,279 Speaker 2: quite attractive when combined with STAN, which is nine streaming service, 104 00:05:49,680 --> 00:05:52,599 Speaker 2: so you could see an investment there, and then the 105 00:05:52,640 --> 00:05:54,880 Speaker 2: other thing would just be to create a war chest 106 00:05:54,920 --> 00:06:00,400 Speaker 2: to bid for sporting rights. The NRL next contract negotiations 107 00:06:01,080 --> 00:06:03,640 Speaker 2: are likely to happen this year, even though though it 108 00:06:03,680 --> 00:06:06,919 Speaker 2: doesn't kick in until twenty twenty seven. So the chance 109 00:06:07,000 --> 00:06:09,279 Speaker 2: to sort of put in a billion dollar a year 110 00:06:09,480 --> 00:06:12,400 Speaker 2: bid to own not just the free to air rights 111 00:06:12,400 --> 00:06:16,560 Speaker 2: as nine holders at the moment, but also the streaming 112 00:06:16,640 --> 00:06:19,520 Speaker 2: rights which are held by Foxtail at the moment, that 113 00:06:19,640 --> 00:06:23,320 Speaker 2: might be another another possibility. So I think, yeah, it's 114 00:06:23,360 --> 00:06:26,920 Speaker 2: a real chance to kind of recast the organization. That's 115 00:06:26,960 --> 00:06:31,279 Speaker 2: assuming the board has the appetite to continue as a 116 00:06:31,279 --> 00:06:34,719 Speaker 2: business rather than have some sort of form of breakup, 117 00:06:34,760 --> 00:06:37,280 Speaker 2: which is the other possibility. When you look at all 118 00:06:37,279 --> 00:06:39,680 Speaker 2: of the kind of the parts of an organization, they 119 00:06:40,279 --> 00:06:45,760 Speaker 2: are they worth more in separate ownership are generally boards 120 00:06:45,800 --> 00:06:49,120 Speaker 2: decide that they actually still have a point in existing, 121 00:06:49,160 --> 00:06:51,839 Speaker 2: so they fight against that one, but in the end 122 00:06:51,920 --> 00:06:55,080 Speaker 2: it becomes something for the shareholders. And then you look 123 00:06:55,120 --> 00:07:00,919 Speaker 2: at the big shareholders where the key player then becomes 124 00:07:01,320 --> 00:07:05,800 Speaker 2: Bruce Gordon or the Gordon family, who effectively own a 125 00:07:05,880 --> 00:07:09,360 Speaker 2: twenty five percent interest in the business, so that gives 126 00:07:09,400 --> 00:07:12,400 Speaker 2: them a very big vote on the future. The Gordon 127 00:07:12,480 --> 00:07:17,600 Speaker 2: family through when long established TV players. Could it be 128 00:07:17,680 --> 00:07:20,640 Speaker 2: that the TV network ends in one direction, and the 129 00:07:20,680 --> 00:07:24,640 Speaker 2: TV interests and other parts somewhere else that in the 130 00:07:24,800 --> 00:07:27,120 Speaker 2: end will probably be up to the Gordon family. 131 00:07:27,800 --> 00:07:29,640 Speaker 1: Stay with me, Tim, I want to get your thoughts 132 00:07:29,760 --> 00:07:31,760 Speaker 1: on the broader ad market and what's happening with the 133 00:07:31,800 --> 00:07:41,160 Speaker 1: digital giants. We'll be back in a moment. I'm speaking 134 00:07:41,240 --> 00:07:44,040 Speaker 1: to Tim Burrow's co owner and a publisher of media 135 00:07:44,120 --> 00:07:49,000 Speaker 1: and marketing industry site Umbrella. Tim. Before the break you 136 00:07:49,080 --> 00:07:52,120 Speaker 1: left us with the tantalizing thought of breaking up nine 137 00:07:52,160 --> 00:07:56,240 Speaker 1: and selling it to different parts. It'd be easy to 138 00:07:56,280 --> 00:07:58,040 Speaker 1: do that if you had a CEO, and at the 139 00:07:58,040 --> 00:08:00,480 Speaker 1: moment nine doesn't have one. Well, I've got an acting CEO, 140 00:08:00,560 --> 00:08:05,280 Speaker 1: Matt Stanton. But why, I mean, why wouldn't they put 141 00:08:05,280 --> 00:08:07,600 Speaker 1: a CEO? And why wouldn't they put just place him in? 142 00:08:08,480 --> 00:08:11,320 Speaker 2: Yeah, that's becoming fascinating, isn't it, Because there's a point 143 00:08:11,400 --> 00:08:15,480 Speaker 2: when a diligent search of all the options starts to 144 00:08:15,480 --> 00:08:20,320 Speaker 2: look more like dithering than diligence. I've kind of been 145 00:08:20,360 --> 00:08:23,560 Speaker 2: assuming that this would be the week that, perhaps or 146 00:08:23,640 --> 00:08:27,240 Speaker 2: the day of the results Matt Stanton would be announced, 147 00:08:28,280 --> 00:08:31,840 Speaker 2: but that hasn't happened. There was some amusing reporting in 148 00:08:31,920 --> 00:08:36,280 Speaker 2: the AFI this week that perhaps other candidates, including former 149 00:08:36,320 --> 00:08:39,400 Speaker 2: wall Worth's boss Brad Banducci, had been in the frame. 150 00:08:39,880 --> 00:08:42,319 Speaker 2: I think maybe that one's been planned down, but does 151 00:08:42,360 --> 00:08:46,280 Speaker 2: suggest that the the headhunters have been been doing their jobs. 152 00:08:46,320 --> 00:08:50,320 Speaker 2: And again we then wonder, what could it be the 153 00:08:50,440 --> 00:08:55,760 Speaker 2: vote of the Gordon family. They're already represented on the 154 00:08:55,800 --> 00:09:00,200 Speaker 2: board through Andrew Lancaster, the CEO of Win. Could it 155 00:09:00,240 --> 00:09:02,320 Speaker 2: be that they would prefer him as a CEO. That's 156 00:09:02,360 --> 00:09:06,200 Speaker 2: just speculation, but that might be something of what's going 157 00:09:06,240 --> 00:09:09,000 Speaker 2: on behind the scenes. But yes, it would be a 158 00:09:09,160 --> 00:09:12,880 Speaker 2: very good moment to have an actual permanent CEO, though. 159 00:09:13,000 --> 00:09:14,800 Speaker 1: You would think, So, what do you think about the 160 00:09:14,880 --> 00:09:18,320 Speaker 1: market itself? So just leave to Mainer's side. We had 161 00:09:18,440 --> 00:09:21,640 Speaker 1: seven wests suggesting that the bottom of the market had 162 00:09:21,640 --> 00:09:24,680 Speaker 1: been reached. There are signed green shirts at nine as well. 163 00:09:24,880 --> 00:09:27,720 Speaker 1: Very cyclical industry. What do you think about the market 164 00:09:27,760 --> 00:09:28,199 Speaker 1: at the moment? 165 00:09:28,600 --> 00:09:30,720 Speaker 2: It does feel a little bit like green shoots. We 166 00:09:30,760 --> 00:09:33,800 Speaker 2: also saw this week on Monday, Oh Media, the outdoor 167 00:09:33,840 --> 00:09:37,600 Speaker 2: company I was just talking about. Their numbers were good. 168 00:09:37,720 --> 00:09:41,480 Speaker 2: They were fourteen percent up for this current quarter, which 169 00:09:41,600 --> 00:09:46,320 Speaker 2: which really outperforms how their trajectory has been. So it 170 00:09:46,320 --> 00:09:49,800 Speaker 2: feels like they're getting some momentum back. We'll get some 171 00:09:49,880 --> 00:09:54,200 Speaker 2: pretty big signals tomorrow Thursday, with both ARN Media and 172 00:09:54,280 --> 00:09:58,720 Speaker 2: Southern Cross Our Stereo both reporting as well. If they 173 00:09:58,920 --> 00:10:02,319 Speaker 2: show some signs of some sort of pulse returning to 174 00:10:01,679 --> 00:10:06,040 Speaker 2: the advertising market, then wow, we might finally be coming 175 00:10:06,040 --> 00:10:06,640 Speaker 2: off bottom. 176 00:10:06,920 --> 00:10:12,400 Speaker 1: Wouldn't that be nice? What about the government's News Media 177 00:10:12,640 --> 00:10:16,560 Speaker 1: Bargaining Code? We haven't heard as much about that. We 178 00:10:16,640 --> 00:10:19,240 Speaker 1: know Donald Trump isn't a fan of those types of 179 00:10:19,280 --> 00:10:22,960 Speaker 1: things because we'd be what plundering US tech company's revenue, 180 00:10:23,000 --> 00:10:24,959 Speaker 1: which he doesn't like. That idea of what do you 181 00:10:24,960 --> 00:10:26,640 Speaker 1: think that's up to? Hell? 182 00:10:26,640 --> 00:10:29,560 Speaker 2: Look, believe it or not. On Saturday, it'll be the 183 00:10:29,600 --> 00:10:34,079 Speaker 2: one year anniversary of Meta announcing that they are withdrawing 184 00:10:34,280 --> 00:10:38,120 Speaker 2: from that news landscape where they'd previously done deals with 185 00:10:38,200 --> 00:10:42,280 Speaker 2: media owners to avoid being designated under the old News 186 00:10:42,320 --> 00:10:46,520 Speaker 2: Media Bargaining Code. In more recent months, Labour announced their 187 00:10:46,559 --> 00:10:49,600 Speaker 2: policy was to kind of try and create this incentive 188 00:10:49,840 --> 00:10:54,000 Speaker 2: for platforms to carry on funding news that's certainly not 189 00:10:54,080 --> 00:10:57,280 Speaker 2: going to be legislated this side of an election now, 190 00:10:57,880 --> 00:11:02,120 Speaker 2: And of course the concern is any sort of strong 191 00:11:02,240 --> 00:11:06,320 Speaker 2: arming of platforms that could look like a levy would 192 00:11:06,360 --> 00:11:11,559 Speaker 2: be exactly the sort of thing which could become politically radioactive. 193 00:11:11,800 --> 00:11:16,880 Speaker 2: So I think the chances of it happening have reduced significantly. 194 00:11:17,120 --> 00:11:19,600 Speaker 2: But in the end it might not be up to Labor. 195 00:11:19,800 --> 00:11:21,960 Speaker 2: It might be a coalition government that gets to decide. 196 00:11:22,040 --> 00:11:24,920 Speaker 2: We'll have to wait and see. So yeah, I think 197 00:11:24,960 --> 00:11:29,480 Speaker 2: I would be quite surprised now if it actually happens here. 198 00:11:29,600 --> 00:11:31,920 Speaker 1: How's the ABAC gig going in Mumbrella? You're back at 199 00:11:32,000 --> 00:11:33,040 Speaker 1: Umbrella Play going on. 200 00:11:33,120 --> 00:11:36,040 Speaker 2: For you, plenty going on? Yes, Thank you very much 201 00:11:36,080 --> 00:11:39,280 Speaker 2: for the opportunity to mention that I can be found 202 00:11:39,320 --> 00:11:43,040 Speaker 2: in various podcast places, including Yes, the Umbrella Cast, and 203 00:11:43,120 --> 00:11:46,720 Speaker 2: also Media Land, which is the new show that, along 204 00:11:46,840 --> 00:11:51,120 Speaker 2: with my former Mumbrella colleague Vivian Kelly, we're now presenting 205 00:11:51,160 --> 00:11:54,600 Speaker 2: on ABC Radio National on a Friday evening and then 206 00:11:54,640 --> 00:11:58,199 Speaker 2: obviously available in podcast format in which we talk about 207 00:11:58,280 --> 00:12:01,360 Speaker 2: the week in media, are just gone and the week ahead. 208 00:12:01,960 --> 00:12:03,719 Speaker 1: Well, you'd be busy at the moment. Tim, thank you 209 00:12:03,800 --> 00:12:05,839 Speaker 1: for joining Fear and Greed, su and thank you for 210 00:12:05,880 --> 00:12:08,679 Speaker 1: having me s. Tim Burrow's co owner and publisher of 211 00:12:08,840 --> 00:12:12,480 Speaker 1: media and marketing industry site Umbrella. This is the Fear 212 00:12:12,559 --> 00:12:15,280 Speaker 1: and Greed Business Interview. Remember this is general information only 213 00:12:15,360 --> 00:12:18,800 Speaker 1: and should always seek professional advice before making investment decisions. 214 00:12:19,240 --> 00:12:21,720 Speaker 1: Join us every morning for the full episode of Fear 215 00:12:21,760 --> 00:12:24,640 Speaker 1: and Greed, daily business news for people to make their 216 00:12:24,679 --> 00:12:27,319 Speaker 1: own decisions. I'm Sean Elmer. Enjoy your day.