Nine Entertainment Co. Holdings Limited (NEC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. As your Chairman, it's my pleasure to welcome you to the 2020 Annual General Meeting of Nine Entertainment Company. My name is Peter Costello. As you would be aware, this meeting is being held as a virtual meeting. A first for us and probably many of you. You will be able to watch the meeting in real time, submit questions either online or by phone and vote on the resolutions at the meeting today online. If we encounter significant technical problems during the meeting, we may adjourn the meeting until 3:00 p.m. this afternoon to ensure all shareholders have an opportunity to participate and we'll notify the AFX if that happens -- ASX if that happens. Before opening the meeting, I refer you to the disclaimer here on the screen and available through our ASX lodgment. It is now shortly after 10 a.m., and I am advised that this is a properly constituted meeting as a quorum of at least 2 shareholders for a general meeting is present in person or by proxy. I declare the 2020 Annual General Meeting open. I propose to take the Notice of Meeting as read. Copies of the Notice of Meeting and a virtual meeting guide were e-mailed to shareholders in advance of this meeting and are also available on the company website and on the ASX announcements platform. Before we start, I'll give a short explanation of the online system. At the top of the screen, you will see the meeting presenter and the presentation slides. At the bottom of the screen, there are 3 boxes. These allow you to get a voting card, ask a question and download documents such as the notice of meeting. [Operator Instructions] Questions that are relevant to the business of this meeting will be read aloud to me by the company's secretary when we are at that item of business. We may aggregate questions if we receive multiple questions on the same topic. All voting will be by poll, and I declare the poll open now, so you can lodge your vote at any time during the meeting. If you did not cast your vote prior to the meeting, you may cast a live vote using the online platform. Please click, get a voting card and follow the prompts. Voting on the online platform will close 5 minutes after the close of the meeting. I will remind you at the end of this meeting, you cannot cast a vote over the phone. If you experience any difficulties using the online platform, a help line number is displayed at the top of the page. Please ring 1 (800) 990-363. Link Market Services is the returning officer for this meeting. Now let me introduce you to the people who are with me virtually this morning. In Sydney, we have Hugh Marks, our Chief Executive Officer, who will address the meeting a little later; Nick Falloon, Independent Non-Executive Director and Deputy Chair and member of the People and Remuneration Committee; Patrick Allaway, Independent Non-Executive Director and a member of the Audit and Risk Management Committee; Sam Lewis, Independent Non-Executive Director, Chair of the Audit and Risk Committee and a member of the People and Remuneration Committee; Catherine West, Independent Non-Executive Director, the Chair of the People and Remuneration Committee and a member of the Audit and Risk Committee; and also Rachel Launders, our General Counsel and Company Secretary; finally, we have Mickie Rosen, Independent Non-Executive Director on the line from the United States. Chris George and Simon Hannigan from Ernst & Young, the company's auditor, are also available to answer questions regarding the audit at the appropriate time. I'll move now to the Chairman's address. 2020 was an extremely difficult year for Australian business. The global economy went into reverse, and Australia moved into recession for the first time in 30 years. The magnitude of the domestic downturn was sharp and steep as much of the economy was closed by government in response to the pandemic. In the second half of the financial year, large parts of the Australian population were in lockdown. Media companies began shedding staff and closing publications. The ASX 200 Index fell by over 1/3 from peak to trough. We will long remember the COVID-19 pandemic of 2020, its impact on our way of life and the downturn in the economy it caused. This severe downturn dramatically affected advertising revenue. Nine has growing subscription businesses in Stan and Publishing, but the majority of our revenue still comes from advertising through free-to-air television, broadcast video-on-demand and publishing. In 2020, our ratings and audiences were up against -- across all platforms. But overall, advertising dollars were down as companies cut their advertising budgets in response to the downturn. Given the circumstances, the outcome for the year with EBITDA pre specific items in post AASB 16, an outcome of close to $400 million, was a very pleasing result. It compares extremely well with our domestic competitors. What this period demonstrated is the benefit of diversity, the diversity we have been developing in our business over the past few years. Previous decisions to develop sources of revenue outside advertising have proven their worth in this economic downturn. We launched Stan when subscription video-on-demand did not exist in Australia. Our focus on reader revenue and publishing has been successful and is gathering momentum. Our growing subscription-based business helped us, together with advertising on platforms that are structurally in growth, we weathered the storm. As a result, we are now exceptionally well placed as we emerge from this period a stronger and more focused company. We will continue to shift more of our business to a digital platform. At the same time, we've been improving the relative operating performance of our traditional media segments. Across almost all our operating platforms, we have gained audience and revenue share. And we have been able to bring forward years of planned cost reduction. Underlying trends in the industry, which we anticipated and prepared for, continue to get a pace. Increased audiences in streaming and the migration to digital across both our broadcast and publishing business stand us in good stead for the future. We are confident that Nine will continue to occupy a place at the forefront of the Australian media landscape as we move post 2020. The challenges of the recent period also crystallized the need to deal with some long-term issues which were threatening our competitiveness. The first was sports rights. There has been a tendency in Australia to think that the value of sports rights will always and invariably increase. In fact, the challenges of the COVID environment show that in some circumstances, that value has declined. We were forced to address this cooperatively with the NRL during the year. We have realigned values in a way that is fair, both to the sport and to the broadcaster. The other great challenge in this industry is the market power of the global digital platforms like Facebook and Google. They are not subject to the content rules that apply to free-to-air broadcasters in the Australian market. They make very little Australian content and contribute very little to Australian employment. Nonetheless, they're able to use the premium content we produce to attract audiences in the Australian market. We have consistently invested in premium content. In financial year '20, as much as $1 billion across our business. Large global companies use this content to generate revenue and build their platforms, but they do not pay for it at a rate that fairly shares the cost of making it or fairly shares the value they get from it. We cannot be expected to bear all the cost when it is being monetized by others. If we are not adequately compensated, simply, it will become uncommercial to make all the premium content we now make. Such an outcome would not worry Facebook or Google since it would not affect their global businesses in any significant way. But it will affect Australian creators, Australian consumers and Australian culture. We know these companies have enormous market power, and they enjoy significant regulatory benefits, including tax advantages that Australian companies do not. So we are pleased the government has recognized this problem and supports moves to address it. In July 2020, the ACCC released its draft mandatory code designed to facilitate fair bargaining between Facebook, Google and media businesses over the use of their news content. Of course, the final detail will be important. But we commend the ACCC on its work and the government for its firm position on this issue, also supported by the opposition. Local Australian production will benefit, but we believe the ultimate beneficiaries from this will be Australian consumers. Across the year, we paid dividends of $0.07 per share fully franked. This equates to a payout ratio of just over 80% of net profit after tax before specific items. We are committed to paying franked dividends to our shareholders and intend to maintain a payout ratio of [ 60% to 80% ] through the cycle. I would like to acknowledge the tireless leadership and dedication of our whole team, led by CEO, Hugh Marks. Over the past 5 years, Nine has transitioned from a free-to-air television network to a diversified and increasingly digitized content company without parallel in the local market. This transition will benefit our shareholders into the future. Hugh has a strong and stable team around him who have helped shape the company to the business it is today. We have also had comforting stability in our Board throughout the year. All our Directors have remained committed and focused, and they continue to contribute in their individual ways. I want to thank them for their efforts. We have a broad diversity of skills and experience across the board, which overall has been a great support to the management team through this testing period. Through the crisis and as we come out the other side, our focus on the business is unrelenting. Notwithstanding unprecedented conditions, we have continued to improve the relative performance of the traditional businesses. We have contained costs. We have delivered on our longer-term goal of diversifying our revenue streams with new and growing digital assets. And I will now invite Hugh Marks to say a few words. Thank you.

Right. Good morning, and thanks, Peter. Look, let's have a first look at our FY '20 result, which was complicated by lovely accounting changes, the impact of the merger with Fairfax on the prior period, and of course, it was also complicated by the impact of COVID-19 across all our businesses, as Peter just mentioned. Notwithstanding, we were very pleased with what we achieved across the year. For the year to June 2020, Nine reported group revenues of $2.2 billion, which was down 7% on the prior period, and group EBITDA of $397 million, which on a like-for-like basis, was down 16% on the prior period. Group net profit after tax, pre specific items, was $141 million for the year which was down again 16% on FY '19 on a like-for-like basis. We reported a specific item cost of $700 million pretax, the most significant component being the $591 million impairment of intangibles, which included a goodwill write-down of around $300 million relating to Nine's Free To Air business, and as well as $188 million impairment relating to Domain intangibles. On the screen, you'll see the performance of the various parts of our business and the obvious benefits of our portfolio of assets. What you'll see is that some businesses have thrived through COVID period, particularly our subscription-based businesses, whilst others were, of course, negatively impacted by the short-term weakness in the ad market. And reflecting these different business dynamics, while we've cut significant costs from our business and overall, we have, of course, continued to invest in those areas that are in structural growth, specifically, in Stan and 9Now where revenue growth has continued throughout this period and for which we see continuing significant future potential. Looking at the composition in a little more detail, Nine reported broadcasting EBITDA of $197 million. This includes the Nine Television business, 9Now and 9Radio. Television EBITDA of $138 million reflected a COVID-affected metro TV market, which declined by 14% across the year. Nine's share of Metro revenues for the year was just shy of 40%, including a 20-year high in the second half of 41.4%. This reflected Nine's strong relative ratings performance, particularly main channel, prime-time, where more than 70% of our Free To Air ad revenues are generated. Free To Air costs were 6% lower, reflecting the interrupted NRL season as well as Nine's broad focus on costs across the year. Partially offsetting the decline in FTA was the 36% EBITDA growth at 9Now. The Broadcast Video on Demand market grew strongly across the year, up 31%. Strong growth in users and engagement resulted in Nine attracting nearly half of those revenues. At almost $50 million, 9Now is a key contributor to group EBITDA. Results from Nine Radio were disappointing with a 78% decline in EBITDA, highlighting the issues Macquarie Radio is facing. What is pleasing, however, is the clear growth in share we've seen over the past couple of months, as the restructuring we have implemented begins to impact. Digital and Publishing includes the results of Metro Media as well as Nine Digital Publishing. Across the year, Nine reported 7% growth in digital masthead revenue with growth across both subscription and advertising. This went part of the way to offsetting the decline in print and the very soft print ad market masking Nine's share growth. Together with retail sales and our masthead events, what we referred to as reader revenue, this now accounts for almost $0.60 in every $1 of revenue, a creditable transition from a business which relied on advertising for 80% of its revenues 10 years ago. Like-for-like costs climbed by $20 million of which $17 million related to production and distribution, while investment in editorial actually continued to increase at the margin. In total, Metro Media reported EBITDA of $88 million. Stan has had another breakout year with continued substantial growth in all key indicators. Active subscribers of Stan, more than 2.2 million and 20%-plus growth in viewing per subscriber, highlighting increased subscriber engagement. And all these stats were achieved, notwithstanding what was an increasingly competitive environment. Stan's leverage to subscriber growth is again evident with revenue growth of 54%, well in excess of costs which grew by 19%. This led to a significant improvement in operating performance with an EBITDA delta of more than $50 million. After a stronger start to calendar 2020, the challenges relating to COVID-19 heavily impacted on the property market and Domain, of course, through that fourth quarter. Notwithstanding an overall listing market was down in the double digits, Domain benefited from its newly introduced pricing model, increased depth penetration and ongoing cost focus. Now the chart on the screen now highlights Nine's progress as we migrate our business to a digital base. Across the year, profit from our digital businesses, so that's 9Now, Nine Digital and Stan as well as the digital components of Metro Media and Domain, contributed almost half of total group EBITDA, which equates to growth in total digital EBITDA of 40% or around $47 million. And that's in a period when Domain, one of our core digital assets, has encountered significant market-related headwinds with EBITDA declining by $19 million. Ex Domain, Nine's wholly owned digital assets together almost doubled in EBITDA across the year to $112 million. This is a clear indication of the strategy we laid out around 4 years ago to build a digital media business for the future, investing in Stan and 9Now as well as 9Galaxy, and that we furthered with the merger with Fairfax late in 2018. We're well placed to accelerate this strategy as we move through to the next horizon. So that's FY '20. A tough year, but one that has forced us to double down on the long-term transformation of Nine. We had strong operating cash flows, and we finished the year with wholly owned leverage of less than 1x, giving us plenty of liquidity headroom. Moving now to current trading. And although it's only been 3 months since we last updated you on trading conditions, the underlying ad market has markedly improved since our August update. The chart on the screen now shows the month-to-month previous corresponding performance of the free-to-air market and Nine. You can see clearly that both market trends and Nine's performance has significantly improved from the nadir in April, May. At the August result, we commented that we expected Q1 FTA revenue to be around 15% down, an estimate which proved broadly correct. However, since the end of September, the FTA market and Nine's share of that market have both improved significantly. And with the added benefit of major event timing, State of Origin, the NRL finals, Nine's December quarter is now expected to show growth in Metro FTA revenue of around 15%, meaning that we now expect Nine's Metro TV ad revenues in the December half to be broadly flat on the prior period and 9Now revenues in the December half to be up around 25% on the prior period. First half Free To Air costs will be down in the double digits. While we do expect second half FTA costs to increase on last year's as a result of the return of the NRL, which was absent, of course, through the second half of financial year and as well as some reinvestment in content to support the continued recovery of those advertising markets. Overall, we're expecting full year Free To Air costs to be down around 4% on financial year '20 prior to any revenue-related costs. As Domain disclosed at their AGM earlier this week, trading for the first 4 months of FY '20 has improved on late -- FY '21, sorry, has improved on late FY '20 despite the lockdown in Melbourne. Digital revenue for the period to 31 October is up by around 4%, with total revenue down 7%. For the first half, costs are expected to be down by 12%, albeit much of this decline due to JobKeeper and the group's temporary salary reduction in return for shares program. The trends for Nine's other businesses cited at our FY '20 result remain. As a result, at this stage, Nine's first half EBITDA before specific items is currently expected to be up by around 30% compared to the $251 million on a post-AASB 16 pre specific items basis for continuing businesses that was recorded in the prior period. We're certainly trading more positively than we would have anticipated just 3 months ago. And we're very pleased with the operating performance and trends in each of our business units. Despite this, given our limited visibility on the second half ad market, we don't believe we're in a position at this time to provide guidance on earnings for the full year. We do expect to be in a better position to address this at our half year results in February. Much has been achieved at Nine over the past 5 years. In short, we've launched 2 market-leading and profitable video-on-demand platforms, with the technology and partnerships to ensure we can monetize them, and we've completed the largest media merger of our times and the associated structural and cultural integration. Our focus now is on optimizing the performance of our unique suite of assets, primarily through the accelerated migration to digital audiences and the utilization of our data assets, whilst continuing to invest in future growth opportunities. What we have now should not be underestimated. Our television business spans both free through the Nine Network and Broadcast Video on Demand through 9Now and subscription through Stan. Not only does this mean that we have multiple routes to video audiences, but it also enables us to think differently about the content we pursue. We can now focus on making content decisions for the benefit of all of our television platforms. And now optimizing the value of that audience to the most desirable platform, a significant shift in how we assess our content investment. This enables Nine to benefit from both continued growth in television consumption as well as the shifts in viewer behavior. Our recent foray into Rugby Union is perhaps the best example of the latter. Through its relationship with Nine, Rugby Union has secured television coverage for all of its matches providing Rugby Australia with important free-to-air coverage of a range of its key games and increasing the profile of Rugby Union in Australia. Of course, as the broadcaster, Nine will also support the game through the news and other content using the strength of all of our assets to promote the sport. This is effectively a service that only Free To Air can provide. At Nine, it means we can address a valuable and passionate sports audience through Stan's entry into the sports subscription market, providing us a unique optionality as the content market continues to evolve over the next decade, an option we could not have pursued a couple of years ago. We expect Stan Sport to be a valuable addition to our broader television business as we continue to evolve into the future. This also helps to explain our enthusiasm for our classified or marketplace business with Domain and Drive. Not only are we believers in the segment, but we are believers in the value of the unique relationship between these businesses and the Nine Network. The other arm of our business is publishing, primarily our Metro Media business, which is becoming increasingly digital and is not far from the tipping point where digital will outweigh print. Already reader-based revenue, which is pretty much everything ex advertising, accounts for 60% of the total and is eminently more defensible and stable. Resolution of Nine's relationship with the global digital platforms is a key part of this future equation. And as Peter said, we're very grateful that the ACCC and government have finally recognized the significant imbalances that have been formed over the years between the publishers and the digital platforms, and were prepared to take action. We're feeling increasingly positive about the potential outcome and encourage the government to continue to act decisively and proactively to deliver the much-needed reform in a timely manner. Our opportunities in the short term are primarily operational, optimization of the unique suite of assets we have pulled together and exploitation of our strong market positions. We've made much progress already but there is more to do. And here, we highlight 4 key operational targets, which will mark the next stage of Nine's evolution. Firstly, we aim to reduce the cost base of our legacy broadcast and publishing businesses by around $230 million, ensuring they are fit-for-purpose for the future. We now have a detailed blueprint to reach this target by 2024. And already, we have initiatives in place that will deliver around 80% of this target. Secondly, through growth in our digital asset, we aim to source at least 60% of our group EBITDA from digital sources, Stan, 9Now as well as the digital components of Domain and Publishing. With the recovery in free-to-air markets occurring more quickly and steeply than we've previously expected, it is possible this will retrace somewhat in the current year from the near 50% we reported in FY '20. However, longer term, this goal remains intact. Thirdly, we expect more than 35% of group revenues will come from subscription. So that's Stan and the parts of Domain and Publishing, thereby reducing our exposure to advertising markets. And finally, we're targeting around 30% of group revenues to come from video-on-demand. So that's SVOD through Stan, already a $1.5 billion market, and BVOD through 9Now, which at this stage is still a relatively small subset of the broader $1.2 billion digital video market. Nine is in a unique position and in an incredibly exciting position. We now own leading assets across linear television, digital, print and radio. Platforms, data and technology that can enable us to distribute messages to mass audiences as well as to small but highly valuable addressable audiences. We have our systems to ensure seamless and efficient delivery for advertisers, and we have the balance sheet to invest in the content that works for Australians. Moreover, in my mind, we have the best team in the business to deliver long-term profit growth for all our shareholders. And I'll now hand back to Peter.

Thank you very much, Hugh. I will now turn to the formal business of today's meeting, at which time Hugh, the other Directors and I, as appropriate, will be available to respond to questions. Only shareholders and proxy holders are entitled to ask questions. [Operator Instructions] I confirm that where undirected proxies have been given to me as the Chairman of the meeting, I will vote in favor of the resolutions [ as they are permitted. ] During the meeting, we will display on the presentation slides the number of directed proxy votes received prior to the meeting on each resolution. A voting exclusion is in place for resolution 1 relating to the remuneration report, and resolutions 3 and 4 relating to the grant of performance rights to Mr. Marks. Any vote in favor of the resolutions by or on behalf of a restricted voter has been and will be excluded. I come now to the financial statements. The first item of business listed in the Notice of Meeting is to receive and consider the financial report of the company for the year ended 30 June 2020 together with the director's report and the auditor's report as set out in the annual report. Please note, there is no voting applicable to this item of business. As mentioned previously, Mr. George and Mr. Hannigan from Ernst & Young are with us today. Questions relevant to the conduct of the audit, the preparation and content of the independent audit report, the accounting policies adopted by the company in relation to the preparation of the accounts and their independents in relation to the conduct of the audit may be directed to them through me as Chairman. Mr. Marks has already spoken about the financial year '20 results, so I'll now open the floor for questions and discussions in relation to the financial report, the director's report or the auditor's report. I'll ask Rachel to read out if there are any questions.

There are no questions on that item.

Good. Thank you very much, Rachel. We'll then move to the next item of business. The next item of business, resolution 1, is the adoption of the remuneration report. Votes received on this item of business is shown on the screen. The annual report for the financial year ended 30 June 2020 contains the remuneration report, which sets out the remuneration policy for the company, and its controlled entities for the financial year and reports on the remuneration arrangements in place for directors and senior management during that period. While the vote is advisory only, the Board will take note of the result of this vote as it reviews the company's remuneration policy and practices in the future. The company's overall remuneration philosophy is to provide a clear link between shareholder returns and executive remuneration. In developing executive remuneration arrangements, the Board has sought and will continue to seek input from external parties, including remuneration advisers, proxy advisers and shareholders. The company's remuneration structure and policies are designed to help build and retain a talented and motivated leadership team to deliver growing and sustainable total returns to shareholders. With respect to our short-term incentive arrangements, the EBITDA target must be satisfied for a substantial part of an executive's potential short-term incentive to be paid, with the balance depending on achieving personal objectives relevant to the executive's role. Given the challenges faced by the company and the economy as a whole, in the last financial year, no short-term incentives were paid regardless of whether executives met their personal objectives or not. During the financial year, performance rights were issued to a number of senior executives under the long-term incentive scheme. These performance rights will only vest if targets relating to cumulative earnings per share growth and total shareholder return are satisfied over the period to June 2022. It is fair to say that the targets were set to be a stretch for the business to achieve. So if rights vest in 2022, it seems likely shareholders will have enjoyed excellent returns over that period. The performance rights were issued in financial year 2018, were tested over the 3 years to 30 June 2020 against a challenging target set 3 years ago. The earnings per share growth target was not met, so half of those performance rights lapsed. The remaining performance rights were tested against the relative total shareholder return targets, and 74% of those performance rights vested. So 37% of the total rights granted in financial year 2018 are vested. At this stage, I would like to introduce Catherine West, who is the Chair of the People and Remuneration Committee. I would be pleased to take any comments or questions you may have in relation to director or executive remuneration policies or the remuneration report. I now ask the Company Secretary, whether there are any questions on this resolution.

We have received a number of questions from shareholders with respect to why we would pay performance rights in such a difficult year, when our profits obviously fell below earlier expectations.

Well, as I said in the address I just gave on this resolution, in this financial year, we did not pay any of the short-term incentives. The short-term incentives have 2 components. One is an EBITDA hurdle. The other is personal objectives, and commonly called KPIs. The hurdle was not met in relation to EBITDA, so that component would not have been paid. The KPIs would have been met in many respects, in some cases, in all respects. But notwithstanding that, the management volunteered and the Board accepted that they would forgo all short-term incentives for this financial year, given the nature of the downturn. They didn't have to do it, but they did do it. So as it turns out, voluntarily, the management forwent all of their incentives. I should also point out that our company, our head company, a major company, the Nine Entertainment Co., was not in receipt of JobKeeper even in the course of the year. So it wasn't a case of where incentives could have been paid out of JobKeeper. We neither received JobKeeper nor did we pay incentives. Any other questions, Rachel?

There are no more questions on that item.

Good. Thank you. We'll now move on to the next item of business. As it relates to my reelection, I will ask Nick Falloon, our Deputy Chairman, to Chair the meeting for this item of business.

Thanks, Peter. Resolution 2 on the agenda is the reelection of Mr. Peter Costello as a Director of the company. Votes received on this item of business are shown on the screen. Details of Mr. Costello's experience are set out in the explanatory statement, which accompanied the Notice of Meeting. At this point, I'd like to invite Peter Costello to address the meeting and briefly speak to his reelection nomination.

Thank you very much, Nick. When I joined the Board of Nine Entertainment, the company was in the hands of private equity and distressed credit funds. Nine was a free-to-air TV business principally on the East Coast of Australia. We made it a national broadcaster, purchasing stations in Adelaide and Perth. We floated the company on the ASX. We started a streaming business called Stan. We disposed of peripheral businesses like Events. Nine became the highest rating television network in Australia in all the key demographics and with the highest revenue share. More recently, we have merged with the Fairfax company bringing in major publishing titles, 100% ownership of Stan, majority interest in Domain and an interest in Radio, which we have now expanded to full ownership. We are now the largest Australian-owned media company. I have experience as a lawyer, an investment banker, managing an investment fund, and MP and a treasurer. And I ask for your support so I can continue to work with the Board and the management of this great company. Thank you.

I'll now ask Rachel to say if there's any questions on this resolution.

We do. We've got a number of questions from Stephen Mayne. The first, is the Chairman intending to serve a full 3-year term? And is this likely to be the Chairman's final term given he will have served 10 years on the Board at the end of that 3-year period?

Yes, I do intend to serve a 3-year term. And what I do at the end of that term, I'll decide and announce in 2023.

The next question from Mr. Mayne, would you agree with the characterization that you are a fairly hands-off Chairman leaving management of the business to the CEO and his management team? If so, well done. However, are we using your obvious Canberra connections when it comes to federal government lobbying on issues such as the ACCC's attacks on Google and Facebook? What role have you played in this campaign? I hope it is substantial as it is a business regulatory matter, not an editorial issue.

I feel a bit embarrassed to receive congratulations from Stephen Mayne, but I'll take it for present purposes. Well, obviously, I know a lot about regulation and the ACCC, having been a responsible minister for the ACCC for a long time. And obviously, as I said in my speech, I have strong views on the imbalance of bargaining power and I support the measures that the ACCC and the government have announced, and I hope that they're seen through to conclusion to deal with it. And like any Chairman, you can imagine I've made our views well known. And I do think I have been able to make quite a contribution in the area.

There are no more questions on that resolution.

Thank you. I'll now hand the chair back to Peter for the next item on the agenda.

Thank you very much, Nick. Resolution 3 on the agenda is for approval to grant 292,118 performance rights to the Chief Executive Officer, Mr. Hugh Marks, as described in the explanatory statement. Votes received on this item of business are shown on the screen. Mr. Marks is the only Director entitled to participate in the performance rights plan. This plan provides long-term incentives for some of Nine's key executives. Mr. Marks and the other executives who hold performance rights only receive a benefit from those rights if the company's performance for shareholders over the 3-year period from grant of the rights had been at a high level. Targets have been set by the Board to be challenging, so if the company does not perform strongly over the performance period for shareholders, no rights will vest. This means Mr. Marks' incentives are strongly aligned with the company's performance. These performance rights will be tested over the 3-year period to 30 June 2022. They are partly a top-up of the rights granted to him last year following shareholder approval because in early 2020, the Board resolved to increase Mr. Marks' fixed remuneration for the first time since November 2015 to grant him additional allocation of rights to be tested against the hurdle relating to transformation of the company's business to having a more digital focus. Vesting of 40,761 of these rights will be subject to Nine's total shareholder return compared with a group of comparable ASX-listed companies. A further 40,760 will vest if earnings per share growth targets over the 3-year performance period is satisfied. For the remaining 210,597 rights, the Board will consider performance of the company against a number of measures to accelerate Nine's transformation as a digital business over the 3 years to 30 June 2022. Now I ask the Company Secretary, are there any resolution -- any questions on this resolution?

We don't have any questions on that resolution, Peter.

Thank you, Rachel. I'll now go to resolution 4 on the agenda, which is for approval to grant 1,156,026 performance rights to the Chief Executive Officer, Mr. Hugh Marks, as described in the explanatory statement. Votes received on this item of business are shown on the screen. These rights will be tested over the 3-year period to 30 June 2023 against the targets which have been set by the Board. Vesting of 462,410 of these rights will be subject to Nine's total shareholder return compared with a group of comparable ASX-listed companies. A further 461,411 rights will vest if earnings per share growth targets over the 3-year performance period are satisfied. The remaining 231,205 rights will be tested against a number of measures to accelerate Nine's transformation as a digital business over the 3 years to 30 June 2023. I had a question on this resolution from the Australian Shareholders' Association who have asked us to be more specific regarding the targets associated with this LTI. This component of the LTI, long-term incentive, is applicable only to Hugh. I think it is fair to say there is an extensive list of targets which will make up the decision process, all of which relate to our digital growth. These include audience metrics like unique audience, UA, and hours per user as well as revenue metrics across 9Now, Stan and Metro Media. Of course, actual targets for these measures are commercial in confidence so cannot be disclosed. Suffice it to say, if Hugh does reach the bulk of these targets and the long-term incentive LTI is paid, we would expect you, our shareholders, to have benefited as well as the company to have benefited through evolving to its digital future. I'll now ask the Company Secretary, Rachel Launders, are there any further questions on this resolution?

There are no questions on that resolution.

Thank you very much, Rachel. I'll now go to resolution 5 on the agenda, which is for approval to amend the company's constitution to allow direct voting. This is a special resolution requiring at least 75% of votes cast to be in favor. Votes received on this item of business are shown on the screen. This is a common provision in company constitutions and facilitates shareholders voting directly rather than through a proxy. This allows more direct participation by shareholders who may not be able to attend meetings in person and may not want to appoint a proxy. We have been able to accept direct votes this year because of relief for all companies put in place by the Treasurer. This amendment to the constitution is proposed to ensure we can continue to do so in future years. I'll now ask the Company Secretary, Rachel Launders, is there any questions on this resolution?

There aren't any questions on this resolution.

Thank you very much, Rachel. Before I move into general business, I will summarize again the proxies and direct votes that have been received for each resolution. These are shown on the screen. You can still lodge your vote via the online platform up until 5 minutes after the close of the meeting. Once I have received the scrutineer's report on the poll, the results will be announced by notice to the Australian Stock Exchange. Ladies and gentlemen, that completes the items on the agenda of the 2020 Annual General Meeting today. I will now allow an opportunity for questions or comments in relation to the management and/or general business of the company. All of our Board members are available to answer questions posed by our shareholders.

I have a question here from Ian Anderson from the Australian Shareholders' Association who asked about addressable advertising, which we have spoken about in the past but particularly in the context of 9Now. Nine has recently completed what we call our data unification project, where data from 9Now, Metro Publishing and Nine Digital was brought together. If we include Domain, we now have a first-party database of more than 13 million unique user IDs. In terms of sharing data, we work closely with our data partners within the confines of rigorous contracts regarding the use of data and privacy. We also augment our data with third-party data from groups like Equifax and Quantium. This database is unique to Nine and gives us enormous opportunity to better understand our customers and those of our advertisers, and hence, more effectively target that advertising. I'll now ask our company secretary, Rachel Launders, whether there are any further questions submitted for general business.

There are. We have a question from [ Liz Richman ], who is interested in Nine's policy on investing in fossil fuels.