The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has rallied 8% following its profit report.
What happened?
Here are the key takeaways from the Nine Entertainment half year report:
- Revenue fell 4% to $663 million
- Net profit from ongoing operations fell 2% to $75 million (note: a statutory net loss of $237 million was also reported due to a substantial write-down and one-off charges)
- A fully franked half year dividend of 4.5 cents per share was declared
- Domestic TV ratings were boosted by the Olympics
Nine Entertainment company is a leading TV and digital media business, deriving 87% of revenue from traditional free-to-air television. Nine also owns 50% of Stan, the digital streaming service.
"Over the past year, we have made significant progress in rebuilding our Free To Air business," CEO Hugh Marks said. "Nine Network won all prime-time key demographics post the Olympics in 2016."
Currently, the media industry is in a state of flux. Nine is leveraging the shift to online via its push with 9Now, which is an on-demand TV service. It already has some 2.9 million subscribers.
Looking ahead, Nine expects its higher viewership to translate into more revenue in the second half of the year and into 2018. The company expects to meet analyst operating profit forecasts of between $158 million and $187 million over the full year.
Should you buy Nine shares?
In my opinion, today's result looks okay. However, there are a number of hurdles for Nine to cross before its long-term outlook becomes rosy.
At today's prices, I think Nine shares could represent decent value. But I also think there are better opportunities (see below) available on the ASX.
