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- Media conglomerate Nine Entertainment (NEC) is the latest company to scrap its profit guidance for the 2020 financial year
- While the company is currently tracking along as expected, uncertainty in the advertising space is causing concern
- Nine said the free-to-air ad revenue market is currently too unstable to accurately predict profits
- Nevertheless, the company will still pay out its five-cent dividend in April
- Shares in Nine slumped 15.12 per cent today, closing worth 87 cents each
Australian media giant Nine Entertainment (NEC) is the latest company to throw its profit guidance out the window as COVID-19 tears through our economy.
In the company’s February half-year report, Nine predicted a relatively flat 2020 profit on the year before at roughly $424 million. This figure was based on the company’s predictions of how the advertising market would play out this year.
However, the spreading coronavirus is infecting all sectors of our market, and advertising has not been able to escape.
The ad market is in an unusual spot in which consumers are spending less cash as they quarantine themselves in their homes, but the extra time at home means more time to watch television — and adverts.
Essentially, this means people are shopping less, rendering advertising less effective, but better-positioned to view more ads.
It’s this instability and unpredictability in the ad market that has caused Nine to scrap its guidance.
Nine did its best to reassure investors by saying so far, the short-term impact of COVID-19 on the company has been limited. The March quarter has been tracking alone mostly as expected in terms of free-to-air television (FTA) ad revenue.
Further, the company’s audience across its key businesses are still performing well and Nine has a strong balance sheet to keep operating in such a volatile time.
Nevertheless, the fourth-quarter uncertainty brought about by COVID-19 has resulted in Nine deciding it’s better of scrapping its guidance entirely rather than trying to keep predicting it.
Nine will still pay out its upcoming five-cent dividend on April 20.
On top of the Nine Network FTA television channel, Nine Entertainment owns radio broadcaster Macquarie Media, as well as The Sydney Morning Herald, The Age, and The Australian Financial Review news platforms.
Shares in Nine slumped 15.12 per cent today, closing worth 87 cents each. The company has a $1.48 billion market cap.
