Nine reports ad market uncertainty, brings forward cost cutting

Nine Entertainment Co has withdrawn its FY20 guidance it provided just last month. Nine’s board today released a statement which said that guidance was premised on a defined set of advertising market assumptions that are no longer applicable.

At the time Nine said it was expecting to report group EBITDA at a similar level to FY19 – a profit of $423.8m.

Explaining the reasons behind the profit warning, Nine’s board said:

Since this time, the rapid progression of COVID-19 is beginning to have an impact on Nine’s markets. The short-term impact remains limited to date, with Nine’s March quarter FTA ad revenues continuing to track close to flat and overall results for the quarter broadly in line with company expectations.

However, the forward ad market is becoming increasingly difficult to reliably predict. As a result of this Q4 uncertainty, Nine considers it prudent to withdraw its FY20 guidance.

Nine noted that its audiences across its key businesses remain strong. To help offset any drop in revenues, Nine is also bringing forward cost cutting measures where possible.

Nine’s share price has taken a tumble along with the rest of the market. As at midday on March 19, Nine’s shares were priced at .94 cents, down from a 12-month high of $1.04. The market cap is $1.75b.

Meanwhile the Seven West Media share price sank to under 10 cents today in the middle of trading with market cap around $170m. The company has yet to advise the ASX of any profit warning. Last month it was forecasting, subject to market conditions and improved ratings, underlying EBIT of $165m to $175m for the full year.