Nine Entertainment Co has let in the sunlight on its financial situation by revealing earnings of $297.2 million over the past financial year.
According to a prospectus for potential shareholders released this morning, Nine estimates it has a market capitalisation between $1.93 billion to $2.17 billion. The company expects to raise $643 million to $697 million through the December float, with shares to sell for $2.05 to $2.35. Nine Entertainment Co’s assets include the Nine television network, Ticketek, Allphones Arena at Sydney Olympic Park and ninemsn.
Although Nine prides itself on its diversification, the Nine Network remains by far the biggest contributor to the company with earnings of $221 million in 2013. This compares to $57 million for events (which includes Ticketek and Allphones and Arena) and $33 million from its digital division.
The prospectus has been eagerly awaited because it will allow investors to accurately compare the financial performance of the top three commercial television networks. Nine’s total earnings before tax, depreciation and amoritisation (EBITDA) of $297 million for 2012-13 compares to $480 million for Seven West Media. Nine had total revenues of $1.49 billion compared to $1.87 billion for Seven West.
Nine predicts the company’s earnings and revenues will both increase marginally next year — a 2.7% lift in earnings off a 4.9% revenue increase. This is an optimistic assessment given EBITDA fell by 11% in 2012 and by 5% in 2013. The Nine Network’s revenue is forecast to increase by 4.6% or $53.7 million thanks to expected increases in free-to-air advertising and improved ratings performances in Perth and Adelaide. Nine recently bought regional affiliate WIN’s stations in Perth and Adelaide and plans big investments in those cities.
Revenue for the events division is expected to increase by 26.5%, or $44.4 million, over the next financial year off a forecast increase in ticket sales. But digital revenues are expected to decrease by 17% or $25 million.
Nine CEO David Gyngell is likely to emerge as a big winner from the float. As well as a $2 million fixed salary and $2 million short-term incentive, he will receive $10 million-worth of shares, $4.5 million in performance rights and a one-off payment of $2.5 million for the float. This will make him easily the highest-paid media executive in the country.
US hedge fund Oaktree will reduce its stake in Nine from 27.8% to 14.3% following the float, while Apollo will move from 25.6% to 22.0%.
The retail offer for Nine’s shares will open on November 12 and the company will start trading on the Australian Stock Market on December 12. There’s more background on Nine’s IPO in our detailed Crikey Clarifier.
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