1 00:00:05,680 --> 00:00:08,799 Speaker 1: Welcome to the Fear and Greed Business interview are Michael Thompson. 2 00:00:09,080 --> 00:00:12,080 Speaker 1: One of the most interesting companies in Australia would have 3 00:00:12,200 --> 00:00:15,120 Speaker 1: to be Nine Entertainment. It's a legacy media company with 4 00:00:15,160 --> 00:00:19,079 Speaker 1: assets across freedoware television, radio and print, but it also 5 00:00:19,160 --> 00:00:22,759 Speaker 1: has a big digital play with the streaming service stand broadcast, 6 00:00:22,840 --> 00:00:26,799 Speaker 1: video on demand, digital news outlets, podcasts, and stakes in 7 00:00:26,840 --> 00:00:30,440 Speaker 1: other businesses like property platform domain. The company has been 8 00:00:30,480 --> 00:00:33,760 Speaker 1: in the headlines recently for significant job cuts. Like much 9 00:00:33,800 --> 00:00:36,440 Speaker 1: of the sector, it is under huge pressure from the 10 00:00:36,479 --> 00:00:40,000 Speaker 1: digital giants like Meta and Google. Last week, the company 11 00:00:40,040 --> 00:00:42,440 Speaker 1: announced the slump in its profits to two hundred and 12 00:00:42,440 --> 00:00:45,559 Speaker 1: sixteen point four million dollars, largely a result of a 13 00:00:45,600 --> 00:00:50,960 Speaker 1: week advertising market. CEO Mike Sneezebe spoke to Andrew Gagan 14 00:00:51,159 --> 00:00:54,360 Speaker 1: on Osby's about the results. Osby's, of course, is Australia's 15 00:00:54,400 --> 00:00:56,680 Speaker 1: leading provider of live and on demand video of the 16 00:00:56,760 --> 00:01:00,480 Speaker 1: latest news in Australian business markets, economy and startup. You 17 00:01:00,520 --> 00:01:03,240 Speaker 1: can sign up at osbiz dot com dot au. It 18 00:01:03,320 --> 00:01:06,200 Speaker 1: is entirely free. This interview, though, is a great chat 19 00:01:06,280 --> 00:01:09,560 Speaker 1: about the ongoing efforts to take costs out of the 20 00:01:09,680 --> 00:01:12,360 Speaker 1: nine business, about the outlook for the free to are audience, 21 00:01:12,680 --> 00:01:18,840 Speaker 1: the ongoing dispit with meta and changes to gambling ads. 22 00:01:20,880 --> 00:01:22,759 Speaker 2: Mike needs to be thanks so much for joining us 23 00:01:22,959 --> 00:01:26,640 Speaker 2: from nine here at osbi's. You've described the past year 24 00:01:26,640 --> 00:01:32,080 Speaker 2: as a challenging economic and advertising market conditions overall. How 25 00:01:32,120 --> 00:01:33,480 Speaker 2: are you seeing your result? 26 00:01:35,560 --> 00:01:38,160 Speaker 3: Yeah, Look, as you say, it has been been a 27 00:01:38,200 --> 00:01:43,080 Speaker 3: tough year, particularly in the advertising market. But Nine's earnings, 28 00:01:43,120 --> 00:01:48,440 Speaker 3: I think, given our diversification of revenues into combination of 29 00:01:48,520 --> 00:01:52,920 Speaker 3: digital and subscription revenues has meant that our earnings earnings 30 00:01:52,920 --> 00:01:57,800 Speaker 3: have been quite resilient notwithstanding a very tough market. I 31 00:01:57,800 --> 00:02:00,320 Speaker 3: think also underlying the result that we've seen this year, 32 00:02:00,360 --> 00:02:04,520 Speaker 3: there's been some really strong positives, particularly again in the 33 00:02:04,960 --> 00:02:09,000 Speaker 3: growth of our subs businesses and the inflection points that 34 00:02:09,040 --> 00:02:13,000 Speaker 3: we've been talking about in the commentary today, long term 35 00:02:13,080 --> 00:02:17,480 Speaker 3: earnings potential for our publishing business and the expected revenue 36 00:02:17,800 --> 00:02:21,239 Speaker 3: inflection point across our total television business. And of course 37 00:02:21,600 --> 00:02:25,320 Speaker 3: a lot of work done in financial year twenty four on. 38 00:02:25,240 --> 00:02:26,000 Speaker 4: Our cost base. 39 00:02:26,200 --> 00:02:29,960 Speaker 3: As you'll see from the commentary, sixty five million dollars 40 00:02:29,960 --> 00:02:32,639 Speaker 3: have passed out of the business this year, with almost 41 00:02:32,680 --> 00:02:36,120 Speaker 3: fifty million dollars of that expected to be underlying recurring 42 00:02:36,360 --> 00:02:39,000 Speaker 3: cost out, so we certainly have had to focus on 43 00:02:39,480 --> 00:02:42,120 Speaker 3: reshaping the cost base of the business and in some 44 00:02:42,200 --> 00:02:45,440 Speaker 3: cases reinvesting into the important parts of the business that 45 00:02:45,440 --> 00:02:47,760 Speaker 3: are going to give us continued growth into the future. 46 00:02:49,320 --> 00:02:52,080 Speaker 2: That cost out phase has been underway for a number 47 00:02:52,080 --> 00:02:57,079 Speaker 2: of years. Now, can you see any further potential savings 48 00:02:57,120 --> 00:02:57,639 Speaker 2: in the business? 49 00:02:59,440 --> 00:03:03,359 Speaker 3: Yeah, Look, this year we've committed to a further cost 50 00:03:03,400 --> 00:03:06,799 Speaker 3: out of around fifty million dollars across FYI twenty four, 51 00:03:06,840 --> 00:03:09,400 Speaker 3: so that'll be a total of one hundred million dollars 52 00:03:09,400 --> 00:03:12,240 Speaker 3: of costed out across FI twenty four and s FY 53 00:03:12,440 --> 00:03:15,320 Speaker 3: twenty five. I think it is it's really important to 54 00:03:16,000 --> 00:03:19,800 Speaker 3: know that these aren't cost outs, the cost out that 55 00:03:19,800 --> 00:03:21,880 Speaker 3: we are taking without. 56 00:03:21,840 --> 00:03:24,120 Speaker 4: The view to the long term growth in the business. 57 00:03:24,160 --> 00:03:27,160 Speaker 3: So whilst we are taking cost out within that envelope 58 00:03:27,160 --> 00:03:30,400 Speaker 3: you'll see in our result today, we've also invested more 59 00:03:30,440 --> 00:03:33,560 Speaker 3: into the things that drive the business, like technology and 60 00:03:33,600 --> 00:03:38,880 Speaker 3: technology development, which we implemented ahead of the Paris Games 61 00:03:38,920 --> 00:03:41,520 Speaker 3: this year. Will continue to focus on into FI twenty 62 00:03:41,560 --> 00:03:46,880 Speaker 3: five content investments as well as investment in the right 63 00:03:46,960 --> 00:03:50,320 Speaker 3: products and journalism as we focus on driving the subs 64 00:03:50,320 --> 00:03:52,080 Speaker 3: profile of our publishing business. 65 00:03:52,800 --> 00:03:56,320 Speaker 2: And when you talk about those investments and the costs involved, 66 00:03:56,360 --> 00:03:58,760 Speaker 2: is that going to come at further cost, particularly in 67 00:03:58,840 --> 00:04:02,520 Speaker 2: terms of the ahead account. You've already announced a number 68 00:04:02,520 --> 00:04:04,920 Speaker 2: of job cuts, You're anticipating more on that regard. 69 00:04:06,840 --> 00:04:10,080 Speaker 3: Look, we think we've got the cost base set right. 70 00:04:10,080 --> 00:04:12,200 Speaker 3: As I said, there's more costs that are coming out 71 00:04:12,800 --> 00:04:15,840 Speaker 3: in FI twenty five, but a lot of the work 72 00:04:15,880 --> 00:04:18,880 Speaker 3: behind that has already been completed and that will flow 73 00:04:18,880 --> 00:04:22,760 Speaker 3: through obviously into our FI twenty five numbers. We're keeping 74 00:04:22,760 --> 00:04:25,800 Speaker 3: a very close eye on the advertising market. In our 75 00:04:25,800 --> 00:04:30,400 Speaker 3: commentary today we spoke about the expectation of more positive 76 00:04:30,440 --> 00:04:33,600 Speaker 3: markets momentum into the second half of the financial year, 77 00:04:33,640 --> 00:04:36,240 Speaker 3: but of course we'll be tracking that very closely as 78 00:04:36,240 --> 00:04:38,240 Speaker 3: we travel through the first half of the year. 79 00:04:40,520 --> 00:04:43,960 Speaker 2: Mike, when do you see an end to the structural 80 00:04:44,000 --> 00:04:48,120 Speaker 2: decline that's taking place in media at the moment, in 81 00:04:48,160 --> 00:04:51,719 Speaker 2: particular television, I think. 82 00:04:51,720 --> 00:04:54,039 Speaker 4: Two really important points again to reiterate. 83 00:04:54,120 --> 00:04:57,680 Speaker 3: Out of our results today, we gave guidance that we 84 00:04:57,720 --> 00:05:02,240 Speaker 3: expect to see total television revenue new slightly up over 85 00:05:02,279 --> 00:05:06,880 Speaker 3: the full year notwithstanding Olympics revenue being on top of that. 86 00:05:06,960 --> 00:05:10,400 Speaker 3: So that is a combination of our freeoware revenue, which 87 00:05:10,440 --> 00:05:13,000 Speaker 3: is the part of the revenue that's structurally declining, with 88 00:05:13,120 --> 00:05:15,440 Speaker 3: the growth of our BBOD revenue, which is driven by 89 00:05:15,480 --> 00:05:19,520 Speaker 3: the same live and linear content that we see on 90 00:05:19,640 --> 00:05:22,320 Speaker 3: free toowar television. So you really have to look at 91 00:05:22,320 --> 00:05:25,760 Speaker 3: television today in the combination of both of those revenue streams, 92 00:05:25,760 --> 00:05:28,560 Speaker 3: because they are a single business with a singular cost 93 00:05:28,600 --> 00:05:31,560 Speaker 3: base and two different revenue streams. So we believe that 94 00:05:31,640 --> 00:05:35,040 Speaker 3: through the cycle we've reached an inflection point on revenue 95 00:05:35,440 --> 00:05:38,239 Speaker 3: for our broadcast linear business, which. 96 00:05:38,080 --> 00:05:39,599 Speaker 4: Is a really positive sign. 97 00:05:40,320 --> 00:05:44,760 Speaker 3: And in addition to the commentary today around our publishing business, 98 00:05:44,760 --> 00:05:48,160 Speaker 3: we've spoken previously about the fact that the publishing business 99 00:05:48,760 --> 00:05:51,320 Speaker 3: has obviously got inflationary pressures over the long term in 100 00:05:51,400 --> 00:05:54,480 Speaker 3: terms of cost of cost of staff, cost of paper, 101 00:05:54,720 --> 00:05:59,480 Speaker 3: and distribution for our print newspapers. We now believe that 102 00:05:59,800 --> 00:06:02,440 Speaker 3: we have the opportunity, particularly with the success we've had 103 00:06:02,800 --> 00:06:06,080 Speaker 3: in growing our subscription revenue, there's an opportunity for us 104 00:06:06,080 --> 00:06:08,680 Speaker 3: to grow earnings over the long term in that business. 105 00:06:08,720 --> 00:06:11,560 Speaker 3: So we believe two of our most substantial businesses have 106 00:06:11,640 --> 00:06:14,760 Speaker 3: reached some really important inflection points and give us the 107 00:06:14,800 --> 00:06:18,920 Speaker 3: opportunity to think about the long term structure of our business. Today, 108 00:06:19,279 --> 00:06:23,040 Speaker 3: we spoke quite a bit about our integrated audience platform strategy, 109 00:06:23,320 --> 00:06:27,000 Speaker 3: and that's really how we bring audiences together across our 110 00:06:27,040 --> 00:06:32,479 Speaker 3: digital platforms, provide the advertising and commercial opportunities to our partners, 111 00:06:32,839 --> 00:06:36,080 Speaker 3: and maximize returns right across our platforms. And we've had 112 00:06:36,120 --> 00:06:38,600 Speaker 3: really good progress with that strategy this year. 113 00:06:39,600 --> 00:06:42,520 Speaker 2: So we're seeing across the board, not just your company, 114 00:06:42,560 --> 00:06:46,640 Speaker 2: but metal organizations in general free to where broadcast television 115 00:06:46,640 --> 00:06:53,840 Speaker 2: audiences are continuing to decline. How's your stream business in comparison? 116 00:06:54,120 --> 00:06:56,359 Speaker 2: Is that where your strength lies in the future. 117 00:06:58,160 --> 00:07:00,719 Speaker 3: Yeah, absolutely, I mean it's what I should point out 118 00:07:00,720 --> 00:07:05,560 Speaker 3: though this year is we've seen a stabilization in the 119 00:07:05,640 --> 00:07:08,240 Speaker 3: audience declines in free to air broadcast. 120 00:07:08,320 --> 00:07:11,160 Speaker 4: So within our results today, what you'll see is that our. 121 00:07:11,040 --> 00:07:13,400 Speaker 3: Main channel actually grew year on year for the first 122 00:07:13,400 --> 00:07:16,560 Speaker 3: time in a long time, indicating a level of stabilization 123 00:07:16,840 --> 00:07:20,320 Speaker 3: of the audiences on antenna connected television, whilst we also 124 00:07:20,400 --> 00:07:25,160 Speaker 3: saw very strong growth on nine Now and our streaming proposition. 125 00:07:25,280 --> 00:07:28,320 Speaker 3: So that's where the combination of a stabilizing audience on 126 00:07:28,400 --> 00:07:32,160 Speaker 3: free to air. We've continued strong growth in vod gives 127 00:07:32,200 --> 00:07:35,080 Speaker 3: us an overall audience growth which we expect to play 128 00:07:35,120 --> 00:07:40,440 Speaker 3: through into our advertising numbers in FI twenty five And Mike. 129 00:07:40,360 --> 00:07:42,920 Speaker 2: Hew, would you describe the strength in your marketplace as businesses, 130 00:07:42,960 --> 00:07:46,400 Speaker 2: particularly Domain and Drive. Yeah. 131 00:07:46,440 --> 00:07:51,280 Speaker 3: Look, Domain, as you saw in the commentary today, We've 132 00:07:51,280 --> 00:07:55,440 Speaker 3: never had greater conviction around the opportunity to create value 133 00:07:55,440 --> 00:07:57,960 Speaker 3: by having the strength of a media company like nine 134 00:07:58,000 --> 00:08:02,520 Speaker 3: with our audiences and increase any digital audiences being delivered 135 00:08:02,560 --> 00:08:06,320 Speaker 3: into a marketplace business like Domain and coming back the 136 00:08:06,360 --> 00:08:10,000 Speaker 3: other way, the scale of the audiences and data that's 137 00:08:11,160 --> 00:08:14,080 Speaker 3: gathered in the Domain business coming back into our integrated 138 00:08:14,400 --> 00:08:17,440 Speaker 3: audience platform and delivering value in that way. So certainly 139 00:08:17,840 --> 00:08:21,520 Speaker 3: the business model is very strong. We feel very confident 140 00:08:21,520 --> 00:08:24,120 Speaker 3: about our ability to drive value in both directions. 141 00:08:25,160 --> 00:08:26,720 Speaker 4: You point out Drive. 142 00:08:26,840 --> 00:08:31,600 Speaker 3: We haven't broken out Drive previously in terms of financial numbers, 143 00:08:31,600 --> 00:08:34,800 Speaker 3: but not in this year's result. We have for the 144 00:08:34,840 --> 00:08:38,200 Speaker 3: first time, and the reason for that is because, like Domain, 145 00:08:38,280 --> 00:08:41,280 Speaker 3: we see a very strong opportunity to continue to grow 146 00:08:41,360 --> 00:08:44,520 Speaker 3: both revenue and earnings in that Drive business. So we're 147 00:08:44,520 --> 00:08:47,200 Speaker 3: going to start to give the markets and visibility of 148 00:08:47,240 --> 00:08:50,880 Speaker 3: that growth and earnings profile, because quite clearly those kinds 149 00:08:50,920 --> 00:08:55,680 Speaker 3: of digital market based earnings should should be considered a 150 00:08:55,720 --> 00:08:59,960 Speaker 3: really strong driver benign long term financial performance. 151 00:09:01,000 --> 00:09:05,520 Speaker 2: We should also touch on your audio business metrolinear radiovertizing 152 00:09:05,559 --> 00:09:09,040 Speaker 2: market slowing as well. Where are you seeing the strength 153 00:09:09,080 --> 00:09:09,920 Speaker 2: in the future there? 154 00:09:11,880 --> 00:09:14,760 Speaker 3: Again, it's all about the transition into streaming of the 155 00:09:14,840 --> 00:09:18,640 Speaker 3: extremely strong growth in our radio streaming business. Of course, 156 00:09:18,679 --> 00:09:23,680 Speaker 3: the broadcast business itself continued to deliver really strong audience result, 157 00:09:23,800 --> 00:09:28,480 Speaker 3: so we certainly deliver a number one position in the 158 00:09:28,520 --> 00:09:32,440 Speaker 3: Sydney and the Melbourne markets, but it is the growth 159 00:09:32,559 --> 00:09:36,800 Speaker 3: of streaming and our digital products, so streaming live broadcast 160 00:09:36,880 --> 00:09:41,440 Speaker 3: radio combined with our podcasting business, they're seeing the greatest growth. Again, 161 00:09:41,480 --> 00:09:44,320 Speaker 3: it's off a smaller base, but we've seen this occur 162 00:09:44,800 --> 00:09:48,079 Speaker 3: in publishing as we've transitioned to digital, in television, as 163 00:09:48,080 --> 00:09:52,440 Speaker 3: we've transitioned into streaming, and we're seeing the early stages 164 00:09:52,480 --> 00:09:54,960 Speaker 3: of the same transition in our radio business. 165 00:09:56,440 --> 00:10:03,559 Speaker 2: Mike, you're also facing some regulatory headwinds, particular in gambling advertising. 166 00:10:04,080 --> 00:10:07,040 Speaker 2: Obviously that's under debate at the moment. What would you 167 00:10:07,120 --> 00:10:08,360 Speaker 2: like to see happened in that space. 168 00:10:10,160 --> 00:10:14,560 Speaker 3: Yeah, Look, gambling advertising, it's a complex subject. So I 169 00:10:14,559 --> 00:10:18,160 Speaker 3: think it's first really important to acknowledge that there is 170 00:10:18,240 --> 00:10:22,400 Speaker 3: a social challenge and social issue that the government is 171 00:10:22,480 --> 00:10:26,560 Speaker 3: looking to solve, and nine is extremely supportive of the 172 00:10:26,679 --> 00:10:29,480 Speaker 3: need to ensure that we're looking after the interest of 173 00:10:29,480 --> 00:10:34,440 Speaker 3: the Australian public in whatever changes to regulation that we make. 174 00:10:34,480 --> 00:10:37,320 Speaker 3: But I think it's also very important to balance the 175 00:10:37,360 --> 00:10:41,120 Speaker 3: potential to block gambling advertising with the implications and the 176 00:10:41,120 --> 00:10:44,440 Speaker 3: flow through that that can have on grassroots sports and 177 00:10:44,480 --> 00:10:47,280 Speaker 3: on major sports in Australia, which are obviously a really 178 00:10:47,280 --> 00:10:50,560 Speaker 3: important part of our cultural landscape. So we do have 179 00:10:50,640 --> 00:10:53,480 Speaker 3: to be careful about the way that we implement these 180 00:10:53,640 --> 00:10:56,200 Speaker 3: kinds of regulations. And of course, if there is a 181 00:10:56,240 --> 00:11:01,559 Speaker 3: regulation that applies to our broadcast services, which are heavily 182 00:11:01,600 --> 00:11:05,120 Speaker 3: regulated services, the same kind of regulation needs to apply 183 00:11:05,600 --> 00:11:09,959 Speaker 3: to digital platforms and digital advertisers, who aren't typically regulated 184 00:11:10,280 --> 00:11:12,240 Speaker 3: in the same kind of way. So it's a complicated 185 00:11:13,200 --> 00:11:16,720 Speaker 3: topic and certainly we're engaged very closely with the government 186 00:11:16,720 --> 00:11:19,920 Speaker 3: to get the right outcomes firstly for the Australian population, 187 00:11:20,080 --> 00:11:23,439 Speaker 3: but also the right outcomes for business and for sporting bodies. 188 00:11:24,240 --> 00:11:26,760 Speaker 2: It might just finally, you've mentioned that dominance of global 189 00:11:26,760 --> 00:11:29,800 Speaker 2: tech companies and the increasing threat they pose to these 190 00:11:29,840 --> 00:11:33,640 Speaker 2: business models locally, in particular regards to the News Media 191 00:11:34,080 --> 00:11:38,160 Speaker 2: Bargaining Code. What do you want to see on that front, 192 00:11:38,200 --> 00:11:40,600 Speaker 2: in particular action from the government. 193 00:11:42,160 --> 00:11:46,640 Speaker 3: Yeah, well, look, I should first reiterate that the dominance 194 00:11:46,800 --> 00:11:51,800 Speaker 3: and influence of these big tech global platforms is not 195 00:11:51,960 --> 00:11:56,000 Speaker 3: just something that's impacting the media landscape. It's impacting the 196 00:11:56,040 --> 00:12:00,880 Speaker 3: Australian population. It's also impacting a number of different industries 197 00:12:00,920 --> 00:12:03,400 Speaker 3: and I speak to a lot of other chief executives 198 00:12:03,480 --> 00:12:07,000 Speaker 3: around the impact of that dominance and influence in their 199 00:12:07,000 --> 00:12:11,120 Speaker 3: respective industries, and the theme is very similar in relation 200 00:12:11,600 --> 00:12:14,120 Speaker 3: two media. As you say, we have the News Media 201 00:12:14,160 --> 00:12:17,320 Speaker 3: Bargaining Code in place and we continue to encourage the 202 00:12:17,320 --> 00:12:20,240 Speaker 3: government to use that code to its full extent in 203 00:12:20,360 --> 00:12:23,520 Speaker 3: order to ensure there's a level playing field for local 204 00:12:23,559 --> 00:12:28,000 Speaker 3: media companies amongst big tech platforms in Australia. But we 205 00:12:28,120 --> 00:12:31,200 Speaker 3: also encourage them to go further and look at further 206 00:12:31,720 --> 00:12:34,880 Speaker 3: regulation to ensure that we're getting ahead of the curve 207 00:12:35,240 --> 00:12:37,360 Speaker 3: and we don't have areas where we can have big 208 00:12:37,400 --> 00:12:41,440 Speaker 3: tech finding their way through existing regulation, so we'd encourage 209 00:12:41,480 --> 00:12:44,600 Speaker 3: the government to look at additional measures beyond that of 210 00:12:44,920 --> 00:12:47,800 Speaker 3: the News media Bargaining Code, and measures that begin to 211 00:12:47,800 --> 00:12:51,760 Speaker 3: address some of the future challenges, including things like artificial intelligence. 212 00:12:59,160 --> 00:13:02,360 Speaker 1: That was nine C CEO Mike Sneezeby speaking to Andrew 213 00:13:02,440 --> 00:13:05,000 Speaker 1: Gagan from Osby's. Sign up at Osby's dot com dot 214 00:13:05,040 --> 00:13:08,160 Speaker 1: au it's free. This is the Fear and Greed Business Interview. 215 00:13:08,360 --> 00:13:10,840 Speaker 1: Join us every morning for the full episode of Fear 216 00:13:10,880 --> 00:13:13,120 Speaker 1: and Greed. Daily business news for people who make their 217 00:13:13,160 --> 00:13:15,000 Speaker 1: own decisions. Are Michael Thompson. 218 00:13:15,360 --> 00:13:15,920 Speaker 4: Enjoy your day.