nine entertainment co. 24 artarmon road, willoughby nsw 2068 tel +61 2 9906 9999
www.nineentertainment.com.au
ASX ANNOUNCEMENT Wednesday 7th May 2014 The Manager Company Announcements Office Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam, Nine Entertainment Co. Presentation - Macquarie Australia Conference 2014 Attached is a copy of a presentation to be delivered by Simon Kelly, Chief Operating Officer & Chief Financial Officer of Nine Entertainment Co., at Macquarie Australia’s conference today. Yours faithfully
Simon Kelly Chief Operating Officer, Chief Financial Officer & Company Secretary F
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Macquarie Conference 7th May 2014
Simon Kelly COO/CFO
Nola Hodgson Head of Investor Relations
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Important notice and disclaimer
This document is a presentation of general background
information about the activities of Nine Entertainment Co.
Holdings Limited (“NEC”) current at the date of the
presentation, (7th May 2014). The information contained in
this presentation is of general background and does not
purport to be complete. It is not intended to be relied upon
as advice to investors or potential investors and does not
take into account the investment objectives, financial
situation or needs of any particular investor. These should be
considered, with or without professional advice, when
deciding if an investment is appropriate.
NEC, its related bodies corporate and any of their respective
officers, directors and employees (“NEC Parties”), do not
warrant the accuracy or reliability of this information, and
disclaim any responsibility and liability flowing from the use of
this information by any party. To the maximum extent
permitted by law, the NEC Parties do not accept any liability
to any person, organisation or entity for any loss or damage
suffered as a result of reliance on this document.
Forward looking statements
This document contains certain forward looking statements
and comments about future events, including NEC’s
expectations about the performance of its businesses.
Forward looking statements can generally be identified by
the use of forward looking words such as, ‘expect’,
‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’,
‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’
and other similar expressions within the meaning of
securities laws of applicable jurisdictions. Indications of, and
guidance on, future earnings or financial position or
performance are also forward looking statements.
Forward looking statements involve inherent risks and
uncertainties, both general and specific, and there is a risk
that such predictions, forecasts, projections and other
forward looking statements will not be achieved. Forward
looking statements are provided as a general guide only, and
should not be relied on as an indication or guarantee of
future performance. Forward looking statements involve
known and unknown risks, uncertainty and other factors
which can cause NEC’s actual results to differ materially from
the plans, objectives, expectations, estimates and intentions
expressed in such forward looking statements and many of
these factors are outside the control of NEC. As such, undue
reliance should not be placed on any forward looking
statement. Past performance is not necessarily a guide to
future performance and no representation or warranty is
made by any person as to the likelihood of achievement or
reasonableness of any forward looking statements, forecast
financial information or other forecast. Nothing contained in
this presentation nor any information made available to you
is, or shall be relied upon as, a promise, representation,
warranty or guarantee as to the past, present or the future
performance of NEC.
Pro Forma Financial Information
The Company has set out in this presentation certain non-
IFRS financial information, in addition to information
regarding its IFRS statutory information.
The Company considers that this non-IFRS financial
information is important to assist in evaluating the
Company’s performance. The information is presented to
assist in making appropriate comparisons with prior periods
and to assess the operating performance of the business. In
particular, this information is important for comparative
purposes with Pro Forma information contained in the
Company’s IPO Prospectus dated 8 November 2013.
All dollar values are in Australian dollars (A$) unless other
stated.
Disclaimer
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3 1.Pro Forma EBITDA includes $3.4m share of associates’ NPAT
Nine Network Nine Events Nine Digital and Ventures
No.1 audience share position in all key advertising demographics
FY14 PF forecast Group EBITDA contribution:
$237.6 million (73%)
No.1 ticketing business in Australia and New Zealand by
tickets sale volume
FY14 PF forecast Group EBITDA contribution:
$67.1 million (21%)
A leading Australian
online publisher
FY14 PF forecast Group EBITDA contribution:
$19.0 million 1 (6%)
• Portfolio of assets provides NEC with cross-promotion and cross-selling opportunities
— Delivers entertainment content in multiple ways
— Offers advertisers multiple distribution channels and unique opportunities across NEC’s wide audience base
Integrated portfolio of complementary media businesses F
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Exposure to an improving advertising market
4
Australian advertising expenditure by segment (A$bn)1 Television as percentage of total advertising expenditure
• Overall advertising industry expenditure has grown at a CAGR of 3.3% over the last 10 years
• NEC operates in the two single largest segments of the advertising industry – television and online media
• Television has maintained a relatively stable 27 to 30% share of overall advertising expenditure in the past 10 years
• Online media has experienced strong growth as advertising has shifted away from other media such as newspapers
• Strong positions in FTA TV and online media mean NEC is well placed to benefit from improvements in advertising expenditure
– Television and online segments currently represent almost 60% of advertising expenditure
NEC e
xposu
re
1. Source: Commercial Economic Advisory Service of Australia (CEASA), Advertising Expenditure in Main Media, Year ended 31 December 2013
30.3% 30.3% 29.2% 28.9% 28.4%
27.3% 27.7%
29.7% 29.3% 29.3% 29.9%
0%
5%
10%
15%
20%
25%
30%
35%
CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13
2.9 3.3 3.4 3.4 3.8 3.7 3.5 4.1 4.0 3.9 4.0
0.2 0.4 0.6 1.0
1.3 1.7 1.9
2.3 2.7 3.3 4.0
3.3 3.7
3.8 3.7
4.1 4.1
3.5
3.7 3.4 2.9
2.4
0.6
0.7 0.7
0.7
0.8 0.8
0.6
0.7 0.6 0.5 0.4
0.7
0.8 0.9
0.9
1.0 1.0
0.9
1.0 1.0 1.0 1.0
1.8
1.9 2.1
2.0
2.3 2.3
2.2
2.0 1.9 1.7 1.6
9.7
10.8
11.6 11.8
13.2 13.7
12.6
13.7 13.5 13.3 13.4
0
3
6
9
12
15
CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13
Advert
isin
g e
xpenditure
(A
$bn)
Television Online NewspaperMagazine Radio Other
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Revenue share premium emerging
• Five years of consistent Free To Air ratings improvement
• Strong performance across the schedule led by News and Current Affairs, Sports, and Local Production
• Revenue share trends follow ratings performance
• Premium emerging to reflect consistency and predictability
Source: OZTAM. All People, 6am-midnight, ratings share data Free TV revenue share data ^FTA free to air
30.0%
31.0%
32.0%
33.0%
34.0%
35.0%
36.0%
37.0%
38.0%
39.0%
40.0%
H2FY07
H1FY08
H2FY08
H1FY09
H2FY09
H1FY10
H2FY10
H1FY11
H2FY11
H1FY12
H2FY12
H1FY13
H2FY13
H1FY14
Ratings share
Revenue share
Sustained positive FTA^ ratings momentum F
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Targeting 40% revenue share by end of 2015
6 1. OZTAM data. Calendar year to date to week 18, May 3rd vs previous corresponding period. 6am-midnight
• Nine is the only Network to have gained share nationally in every key advertiser demographic in 2014 to date1
• Primetime ratings up more than 1.5 points across all key advertiser demographics
• Ratings success stories year to date include The Block (5-city audience up 12% year-on-year); new drama Love Child (average 5-city audience of ~1.5m) and News and Current Affairs
• The Voice returned Sunday night to an average 5-city audience of 2.2m, or 2.9m nationally. Strong sports line-up with World Cup Cricket, The Ashes and World Cup Rugby in 2015, coupled with long term Cricket and NRL rights
• News initiatives, Adelaide and Perth improvement and consistent delivery to drive share gains
Commercial ratings
share, 5-city1 CY 14 (ytd) Variance
25-54s #1 37.7 +0.5 pt
18-49s #1 37.5 +0.5 pt
16-39s #1 37.2 +0.5 pt
All People #2 37.1 +0.6 pt For
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• News is a critical part of the schedule and also has the benefit of being owned content
• In early 2014, Nine announced the extension of the evening News from half an hour to one hour
• Incremental cost of $10m for 150 hours of Prime Time programming
• 5 City News ratings share year to date 1% pt higher than 2013 at 44.1% (primary channel share)
• Adelaide and Perth News markedly underperform
Source: OZTAM. All People, Primary Channel commercial share. 6pm-7pm, Monday-Friday, prior calendar years (2012 ex Olympics) vs 2014 year to date, 1st January to May 3rd
Move to one hour news boosting the evening schedule
34.0
36.0
38.0
40.0
42.0
44.0
46.0
2010 2011 2012 2013 2014 (ytd)
6-7pm ratings^
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Growth opportunities through the formation of a national network
8
• Historical performance in newly acquired licence areas (Adelaide and Perth) under the operation of the previous owner has
been below Nine Network’s performance in its traditional licence areas (Sydney, Melbourne and Brisbane)
• Strategy to increase audience and revenue share in Adelaide and Perth by:
– improving operational practices
– investing in local news and current affairs
– reaffirming commitment to the local market
Seven
Ten
Nine Network’s newly acquired licence areas’ aggregated
audience share (2007–2014YTD (to 3 May 2014))1 Nine Network’s licence area audience share
(January–December 2013)1
1. Source: OZTAM. All People, 6am-midnight
40.7% 39.2%
38.3% 39.3%
32.7%
29.1% 30.8%
20%
25%
30%
35%
40%
45%
Sydn
ey
Bri
sb
ane
Me
lbou
rne
Tra
ditio
na
lm
etr
opo
lita
n
Ad
ela
ide
Pe
rth
New
lyA
cqu
ired
29.9% 30.4% 30.2%
32.4%
29.9% 30.4% 30.8% 31.5%
15%
20%
25%
30%
35%
40%
45%
2007 2008 2009 2010 2011 2012 2013 2014
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Ticketek:
• #1 ticketing services provider by sales volume in
Australia and New Zealand with > 50% market share
• Tickets 19 of the top 20 venues (by capacity) in
Australia via long term contracts
Allphones:
• largest indoor entertainment arena in Australia
• One of the world’s top ten concert arenas by ticket
sales volume
Nine Live:
• Newly established, integrated live entertainment
business.
• Lowest margin business but generates significant
ancillary revenues and cross promotional
opportunities.
• Tours include One Direction, Ricky Martin, Keith
Urban and Jessica Mauboy.
• Growing event pipeline through 2014 and beyond.
Diversifying the revenue stream, creating opportunities and
cross-selling across the NEC group
Nine Events – Opportunities flow
9
Nine Events – Diversifying from the core
Ticketek
Allphones
Nine Live
Other
Revenue contributors to Nine Events
5
6
7
8
9
H1FY10
H2FY10
H1FY11
H2FY11
H1FY12
H2FY12
H1FY13
H2FY13
H1FY14
Ticket volumes - m
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NEC took control of Mi9 on 1 November 2013 with Microsoft continuing as
a strong strategic partner
Mi9 – the leading online domestic publisher:
• Leading overall audience network with monthly reach of 10.1m
• Leading share of online display market revenue – strong growth
from online video advertising (long form up 26%). Growth in search
revenue from Bing
• Focused on deepening the integration between TV and digital. 9
Jump-in – the home of catch-up TV for Nine, Go and GEM. 675K
downloads of the app, website has had over 6.2 million unique
browser visits since launch in Nov 2013
Data:
• In April, launched Tipstone, an NEC venture providing specialised
data services to Australian business
• Superior data offering – with data on over 14m Australians
• Data partnerships with Roy Morgan and Experian
SVOD:
• Plans to launch a Subscription Video On Demand Service in H2
CY14
Partnerships:
• Daily Mail Australia – already 6th largest news site in Australia. Up
117% yoy (Nielsen, March 2014)
• Identification and assessment of additional opportunities
Our digital future is in Our Hands F
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250k-plus
tickets sold
6 concerts at
Allphones
Arena
1D performs
on 9’s
Morning
Show
Exclusive
marketing
opportunity
Nine picks up
incremental
advertising
from Coles
1D perform on The
Voice and TV Week
Logies
Tour
organised
by Nine Live
Integrated platform
Ticketing
contract
with
Allphones
Partnership for
tours
Introduced 1D
to Nine Live
19k Coles
customers
attend an
exclusive
concert at
Allphones
Exclusive
behind the
scenes
coverage of
1D tour
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• Deregulation
• Reach - a national network
• Voices - diversify in to other media
• Licence fees - >$50m spent each year, highest rate in developed world
• Retransmission - opportunity to stop current payments and develop a revenue stream
• Scale and Breadth
• To establish a leading cross media business
• Expansion into other media segments
• Increases relevance and creates opportunities for promoting and cross selling
• Over-The-Top
• Plan to launch a streaming business in H2 CY14
• 8m TV household market of active TV consumers
• Deep understanding of Australian TV viewers, plus ability to promote, coupled with first mover
advantage
Well positioned to capitalise on opportunities
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Investment highlights
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A leading, integrated portfolio of complementary media businesses 1
Strong positive momentum within the Australian FTA market 2
Strategies in place to reach 40% metro TV revenue share 3
A growing and evolving Events business offering strong synergies with the rest of the group
A re-invigorated and unshackled Digital business
1
Well-positioned to capitalise on opportunities including impending Media Sector deregulation
Modest debt levels with financial flexibility 7
4
5
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