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

Well, good morning, everyone. I'm Hugh Marks, the CEO of Nine Entertainment, and I'd like to welcome you to the company's first half financial year 2021 results briefing from our new state-of-the-art Sports studio in North Sydney. Maria Phillips, our CFO, of course, is also with me here today. Now I'm pleased to announce today a really strong first half result. In a period where much of Australia spent time in lockdown and the Australian economy went into technical recession, we've reported what I consider an extraordinary 42% increase in EBITDA with growth across all of our key television and publishing businesses. The [ code of ] line of business remains content, and Nine continues to create the content that audiences most want to consume. During the half, we recorded strong audience performance across all of our platforms. And our ability to monetize these audiences will continue to be enhanced through Nine's technology and data assets, both of which are many years ahead of our traditional competitors. Of course, the standout highlight this half was the performance of the advertising market. What started in late September as the first signs of recovery in television across both Free to Air and BVOD broadened as the half progressed and has continued into the current half. Nine's on-demand assets also grew strongly this half. Between 9Now and Stan, EBITDA increased by $28 million. So through 2020, Australians embraced the on-demand, driving audiences to a whole new level. 9Now grew daily active users and streams and attracted almost half the revenue from a BVOD market that grew by 44%. While Stan more than doubled its EBITDA to $37 million, capping off a productive period with the securing of the NBCU content, announcement of Stan Sports, where we are today, an increased commitment to Stan originals. This expedited growth allowed Nine to expand our horizons for both Stan and 9Now, enhancing our view of their longer-term potential. Now while underlying markets began to recover, Nine also performed well across the metrics we could control. In combination, costs for the half across all of Nine declined by more than $120 million or 13%, notwithstanding continued investment in our growth platforms. But our cost performance is deeper than this metric. Our group-wide content spend, which totaled around $300 million in the first half of FY '19, totaled almost $400 million in this half, with the traditional FTA businesses accounting for just 64% of this total spend. We've done much over the past couple of years, both to variablize our traditional cost base while investing in our expanding digital footprint. This result also shows further progress in the transformation of Nine. Growing our exposure to both digital, now 41% of group EBITDA; and subscription, 27% of our revenue with this result, giving us countercyclical drivers at scale to the traditional advertising market. Net debt at the end of December was below our earlier expectations at around $150 million, equating to leverage of just 0.4x. Reflecting on this result, we've resolved to return the $2 million our wholly owned entities, NineEvents and Pedestrian, received during the heart of the pandemic from the federal government in the form of JobKeeper. Of course, we're immensely grateful to support the government showed Australian businesses during this period and gave us the comfort and confidence to minimize the disruption for our employees. We've subsequently determined that our underlying group performance was strong enough to warrant its return, the impact of which will be reflected in our full year results. On Page 5, you'll see the performance of the various parts of our business and the obvious benefits of our portfolio of assets. Across the board, our television assets reported strong growth. Nine Network as well as 9Now and Stan and each with different drivers. We continue to believe that video is the key long-term driver of the future media market, and we're well positioned to benefit both through the structural growth in BVOD and Stan subscription revenues. The strong growth in the ad market in Q4 also contributed to the 59% or $89 million growth in our total television profits. The chart on Page 6 highlights Nine's progress as we continue to migrate our business to a digital base. Across the half, profit from our digital businesses, so that's 9Now and Stan as well as the digital components of publishing and Domain, contributed more than 40% of total group EBITDA, which equates to growth in total digital EBITDA of 53% to more than $140 million for the half. In addition [ to VOD ], Metro Media recorded strong and profitable growth in digital subscriptions as the business continues its strategy of building reader revenue. And Domain reported year-on-year growth in market listings and 9% growth in controllable yield [indiscernible] continued to strengthen its digital proposition for both consumers and agents. Our strategy remains clear and our pursuit of that strategy unrelenting. To build the media business of the future, consolidating and expanding our digital investments in video-on-demand and marketplaces but equally supported by our core broadcasting and publishing assets. We continue to drive profitability and cash flow from our traditional media businesses through efficiency, while driving long-term profit growth through our digital media assets. Now at this point, I'd like to ask Maria to talk through the group financials in greater detail. Over to you, Maria.

Thanks, Hugh, and good morning, everyone. These results are much simpler than recent years, both the current half and the pcp, and now reported on a post-AASB 16 basis, enabling direct comparisons. And we've also fully cycled the impact of the Fairfax merger. As such, what we've historically referred to as reported and group results will finally be consistent. Nine reported group revenue of $1.2 billion, broadly flat on pcp; and group EBITDA of $355 million, which was up 42% and consistent with the more than 40% guidance we gave in mid-December. Group net profit after tax and minorities was $178 million for the half. We also reported a net specific item cost of $5 million. On a statutory basis, net profit for the half was $182 million. The Board has approved the payment of a fully franked dividend of $0.05 with this result. For the full year in total, we continue to expect to pay dividends equating to 60% to 80% of net profit after tax and before specific items. Slide 9 details the composition of specific items, which totaled together less than $8 million pretax. The largest component of this was the write-down in children's and local programming inventory, a result of the recent change in content quotas. On Page 10, we look at operating cash flows, focusing on the wholly owned business, so it ties into wholly owned net debt. For the half, operating cash was $252 million with the adjustments in the table reflecting the impact of Domain. Cash conversion was 84% with the late-term market recovery impacting on working capital, as you can see from our balance sheet. On Page 12, we have reconciled net debt of the wholly owned group from a starting position at the first of July of $291 million to the $150 million we've reported for the end of December. Beyond the operating cash flow movements from wholly owned businesses, Nine distributed dividends of $34 million to shareholders, and CapEx was $43 million, of which around $19 million related to the relocation of Nine Sydney offices to 1 Denison Street. On a wholly owned basis, our leverage at the end of December was around 0.4x EBITDA, leaving us plenty of liquidity headroom and is well below our banking covenants. We expect June-end net debt to be higher than December due mainly to a further $45 million of CapEx, marking the completion of the Denison Street move as well as the resumption of PAYG tax payments, which were deferred during COVID. Looking now at the divisional results, starting with our Broadcast division, which comprises our Free To Air business, 9Now and 9Radio. Together, Broadcast contributed around 56% of group revenue and 61% of EBITDA for the half. Page 14 steps through the performance of our Free To Air television business. Total Free To Air revenues for the half were $523 million, which equates to a decline of 2%. Nine's Metro Free To Air ad revenues, which account for around 85% of total Free To Air revenues, were broadly flat, consistent with the underlying market. It was definitely a tale of 2 quarters, however, with Nine's Metro Free To Air revenues down 16% in the September quarter before growing by more than 20% in the December quarter. Nine's share of metro ad revenues for the half was 38.6%, which was broadly flat on pcp. Premium revenues called out in this table notwithstanding the disruptive impact of COVID, Nine's premium revenue was 4% higher across the half. Free To Air costs was 16% or around $70 million lower than pcp, resulting in EBITDA for the year of $171 million, up 55% on pcp and a 10-year-high margin of nearly 33%. The chart on Page 15 gives a bit more detail on Free To Air costs and most specifically, the balance between long-term structural cost out and costs that will or have already returned. Of the $70 million decline in costs across the half, scheduled changes due to COVID like the absence of Love Island, accounted for around 1/4 of the cost decline, the remainder being structural and, therefore, maintainable. And this includes the restructuring of the NRL rights contract and reduced international programming commitments. Turning to Slide 16, the BVOD market, which is defined as 9Now, 7Plus and 10Play, grew strongly, up 44% across the half, of which 9Now attracted a 45% share. As a result, despite an incremental investment in content over the past 12 months, 9Now delivered EBITDA growth of 22% to $33 million for the half. Notwithstanding the absence of Love Island, a strong performer in previous periods, 9Now recorded growth in all key metrics, including monthly active users and engagement. As UAs have grown, 9Now's focus is more clearly on the balance between sell-through and yield. There remains a real opportunity for 9Now to: one, continue to grow its UAs; two, expand its sell-through from what was around 67% in this latest half; three, continue to maintain a double-digit yield premium both to Free To Air and sector average; and four, expand the usage of data to further enhance the advertising proposition and yield. Together, a very strong performance from TV combined as the cyclical and growth drivers of the 2 businesses aligned. This TV market, Free To Air and BVOD, grew by 1.6%, and Nine captured a market-leading 39.1% share. TV combined will become an increasing focus, both operationally and in terms of our reporting, particularly as Virtual Oz is rolled out through 2021. The results from 9Radio were disappointing. However, they described some promising trends. Nine has done a great job of refreshing talent with our core top network growing cumulative audience in thousands in every market and by a total of 15%. As a result, Nine has refocused its radio sales team without adverse effect on the cost base. And we remain confident that our radio results will improve as the ad market continues to recover. Moving on to Page 19. The publishing business comprises what we've historically referred to as Metro Media and Nine Digital. Together, these contributed around 22% of group revenue and 22 -- 20% of EBITDA for the half. We have brought together the reporting of these businesses with a reconciliation to previous results in Appendix 2. Our combined publishing business now derives more than 50% of its revenue from digital sources with a growing proportion of revenue sourced from subscriptions. Proceeds relating to the News Media Bargaining Code will be categorized as licensing. We continue to focus on masthead reader revenue, and in this result, reader revenue sourced directly from Nine's audiences contributed $0.60 in every $1 of revenue for our metro mastheads. Digital subscription and licensing revenue grew by 26% across the half, with digital subscriber numbers growing by more than 20%, December on December, across each of the Herald, The Age and the AFR. This strong growth in digital subscriptions reflects an acceleration in the structural trend of audiences paying for quality, authoritative online journalism across our publications. Print subscription revenue grew marginally through the lockdown period, offset by an 18% decline in retail sales, largely due to COVID impacts on hotels, airlines, employment and CBD retail. Digital advertising revenues across publishing held up well through this period with growth of 4%, while print ad revenues declined. The major categories of travel and luxury goods were heavily impacted by COVID. The sharp decline in other revenue reflected the sale of Weatherzone and the reduced events activity in the period. Overall publishing costs were down by 17% or almost $40 million in total publishing reported EBITDA of $68 million, which was growth of 27% on the pcp. On Page 20, we separate publishing cost out into cyclical and structural. Production and distribution remains a key driver to cost out, driven both by reduced print volumes and our new outsourced printing arrangements. While temporary COVID-related timing issues account for more than half the cost out in this period, our previous outline target of a circa $30 million maintainable net cost out remains intact. Turning now to Stan on Page 21. Over the past 6 months, Stan consolidated its subscriber gains of FY '20, with current active subscribers just passing 2.3 million. Of particular note, the performance of Stan Original Bump, which premiered on New Year's Day and delivered the largest audience for any series on the platform, adding support to our strategy of expanding our original output. Streams for the half were almost up 20%. Subscriber momentum over summer has been seasonally strong, and early activations for Stan Sports are tracking in line with our expectations. Cost increased by 10%, well below revenue growth, with content accounting for just over half of both total costs and the increase. EBITDA of $37 million was more than double the pcp. Stan's second half will obviously reflect the launch of Stan Sports as well as the buildup of NBCU content, both of which we expect will add to the longer-term subscriber potential of the business. And of course, Domain reported last week, and Page 22 summarizes that result. Suffice to say the housing market overall held up markedly better than expected, particularly in Domain's key markets of Sydney and towards the end of the period, Melbourne. The overall residential listings market recorded low single-digit growth with Domain's result benefiting from the 9% growth in controllable yield as well as a like-for-like 10% reduction in costs. During the period, Domain continued to focus on both the quality and magnitude of its audiences and on providing complete solutions for both agents and consumers. I'll now hand back to Hugh for a few parting comments, including an update on current trading.

Thanks, Maria. It was quite a journey. And it's been really an exciting journey for me and one I'm incredibly proud of what we've achieved with Nine over the past 5 years. Today, we're in an enviable position, the true media company of the future with the commitment and passion for delivering the best catalog of premium content to the largest possible audiences, importantly, across every platform. We've successfully migrated our business from the combination of a legacy Free To Air and newspaper business, recognizing the structural changes occurring to a digitally focused media company, committed to growing our business and ensuring our place at the heart of Australia's future. Content remains the key, and our content decisions can now be made on a cross-platform basis. And that gives us a clear advantage, both in production and in acquisition. We can maximize the return by targeting different audiences and different revenue models across different distribution platforms. Some content will work better as an on-demand product, while other has the broad appeal of Free To Air. And only Nine has the unique suite of assets that allows this flexibility. So not only can we deliver the content efficiently across our business, we also have a second-to-none promotional capability in Free To Air television and publishing that itself can create opportunities for Nine, like growing Domain and Drive. Over the past 5 years, we're focused on developing the structures to enable us to achieve our potential, and we're well ahead of our traditional competitors. We now have profitable distribution platforms across all major mediums, both ad-supported and subscription. And we've built market-leading sales technologies that enables our advertisers to buy our inventory more efficiently. And we've consolidated our data assets, enabling our relationship with our advertisers and audiences to broaden and deepen. Automation and addressability will be the future of the ad market, and Nine is the company well-positioned. And all of our businesses are now self-funding, enabled to invest in their own future. We have strong cash flows, low debt, and we'll continue to pay healthy dividends to our shareholders. We finished calendar year '20 with strong operational momentum due both the underlying ad market and our relative position. From an advertising perspective, the Free To Air trends we saw at the end of last year have continued into 2021. And the recent advertising support give us hope that the new baseline may, in fact, be higher. 2020 also enabled us to make inroads into the long-term cost structures, including sports rights and agency commissions that may have continued unabated in different times. But more than this, the COVID pandemic also created unique opportunities for Nine that will enhance the value of our business over the long term. As subscriber growth accelerated, it enabled Stan to execute a strategy to make targeted investments in Stan Originals and Sports as well as the NBCU output deal. This will enable Stan to further differentiate its business proposition as that market continues to evolve, putting Stan on the path to a potential subscriber base and longer-term profitability that I think is well above our earlier expectations. The growth in 9Now daily active users will enable the further expansion of 9Now's advertising proposition. In calendar year '20, we estimate that around 40% of 9Now's revenue attracted a premium due to data. And we expect that our use of data and technology will enable us to grow revenues outside of market factors by more than $10 million as we proceed through calendar year '21. Again, the Adobe deal is a great example of us thinking innovatively, using our scale to offer a viable alternative to the digital behemoth. This past year has also seen a step-change in our digital publishing audiences as Australians have consumed increasing volumes of news online. The value of the premium news that Nine is so committed to investing in and supplying has become even clearer. Government recognized the value of this content, and now it has been instrumental in the building of the digital assets of others, particularly search, and that publishers should be compensated. This is the essence of the digital platform's inquiry, and we're confident that the outcome for our business will be material and will enable us to continue to invest in and provide the quality journalism Nine's audiences are used to. Moreover, it seems that our publishing business looking forward will be predominantly digital. As much as 60% of revenue in FY '24, with a significant component of annuity-type earnings, a business with a reliable earnings stream and consistent growth profile. Now finally, turning to current trading. The ad market continues to show strength, with television, in particular, benefiting from a shift to brand by major advertisers. At this stage, March quarter FTA revenues for the metro market are expected to be up in the low to mid-single digits, notwithstanding the timing of Easter. This strong performance will impact revenue-related costs, namely sales, commissions and incentives. So in total, FTA costs are expected to decrease by around 3% over the year, or, if you exclude the revenue-related costs, approximately 5%. The BVOD market is expected to continue to grow strongly through the second half. In December and January, the BVOD market continued to grow as all players invest in their product by 77% in December, and Australian Open affected 21% in January. As a category, BVOD is finally beginning to realize its potential, and its growth is accelerating. Nine's market-leading deal with Adobe will enable us to further monetize Nine's competitive data advantage, which will underpin our share of this exciting market. 9Radio is expected to improve into FY '22 as the radio market begins to recover. Digital trends in publishing are expect to continue to improve, albeit partially offset by further short-term weakness in print. The primary focus in the second half will be the passing of the News Media Bargaining Code, which will provide, as I said, an incremental revenue stream through the licensing of news content to digital platforms. Recent subscriber momentum is expected to continue at Stan, driven by the launch of Stan Sports as well as the investment in incremental entertainment content. This further investment is expected to expedite subscriber build, which will underpin Stan's longer-term potential. And as Domain commented with its result last week, trading for the start of 2021 has been encouraging, albeit with the continuation of atypical seasonal patterns, making it difficult to predict second half results at this stage. So as you can see from this result, Nine is in a great place. All of our businesses are performing strongly within themselves, and the market environment remains supportive. The competitive advantage we have had worked so hard to establish is now playing out. We formulated the strategy and put in place the assets, and we have the people to ensure the business goes from strength to strength as it continues to evolve. And I think we've certainly said enough now. So maybe I will open the line to questions. Over to you, operator.

[Operator Instructions] Your first question comes from Kane Hannan with Goldman Sachs.

Maybe just 3 questions from me. Firstly, just given the current health in the TV market, has there been any change to your, I suppose, medium-term views around that business, whether there might be a better rationale to invest in market share? Secondly, just on Stan, could you just give us a sense of how we should think about the EBITDA trajectory into the second half, if we were to strip out Stan Sports? And if there's any more color you can give us around the Stan Sports uptake following the opening weekend? And then finally, just 9Now, your share had come down quite a bit in the half. Can you just talk a bit about what drove that and whether you're still aspiring to that 50% share target you spoke to at the Investor Day?

Thanks, Kane. I notice that was 4 questions, not 3, by the way. So TV market, I mean, I think what we're seeing is a return to brand, and we're seeing it in numbers. Obviously, we saw it in the December half. We're certainly seeing it in this quarter. And if we look at our forward bookings out into the fourth quarter, the market is certainly longer than what it's been. And I think that just reflects something that we've been talking about probably since the recovery started to happen, which is advertisers have increased their budgets, at least certainly the national advertisers, and we're seeing them planning for that brand advertising on a longer-term basis. So that's really pleasing to see. And yes, I think that should certainly, over the medium term, see a television business that certainly is stronger than what we would have seen going into COVID. So that's been a really positive cycle that we've seen come around to our advantage. Stan, of course, in the second half, you'll see some buildup of content cost. If you were to strip out Stan Sport, we've got NBCU starting to ramp up in terms of the volume of commitment in the second half. The Showtime content that we acquired from CBS, obviously, we still have rights to do for quite some time. So you'll see some incremental buildup in the second half. Obviously, that's all really significant as Stan goes through a subscriber-acquisition period. So you'll see continued growth in subs, but you will see some buildup in cost in that second half. We spoke about that, I think, when we talked about the results of the full year that you might see Stan over-earning in some months. In some months, there'll be a buildup of cost. I think when you look over the cycle of that and you take out the 6 monthly changes, you'll see that continued buildup in profitability of Stan as revenue continues to outpace cost growth. So -- but I think and what we're seeing with Stan Sports and again, very early days, so very hard for us to make any big commitments around this. But as Maria said in her presentation, the activations that we saw are certainly cycling ahead of our expectations. And pleasingly, from an audience perspective, when we saw the rugby launch on Friday night, which went without a hitch, and the audience performance across Nine and Stan, I think was something like 3x what the equivalent game did last year. And that talks to the strength of our total television business because we're able to basically take advantage of the fact that we have a promotional platform plus the ability to engage really committed fans, have an advertising proposition that also promotes a subscription proposition. And it's something that if we see those trends continue and continue then those sorts of audience performance really places this business in a very strong position. And in terms of 9Now share, yes, we see some moderation. I think, as Maria said, we had, obviously, no Love Island, which, if you remember, that was 30% of our audience, I think, the year before. Obviously, Love Island was impacted by COVID. And we'll see Love Island return this year, so that will drive -- return in the second half, so that will drive -- calendar year, that is -- that will drive those audiences again. You've seen also Seven really significantly increased its investment into the category. And what you saw was probably stronger market growth than we anticipated, and we maybe had a little less share than we anticipated. And frankly, I'd be happy with a stronger market and a lower share than a higher share of a market that maybe is not growing as strongly as we'd like. And if I look at that BVOD market as we go forward, and I'm doing some research now around what the potential of that market size is, I think when we -- all businesses continue to invest in that market and developing those UAs across their platforms, what we're seeing is that BVOD market really coming into play. And that will be a really significant driver into the future, which will help -- again, we have that total television business across Nine, 9Now and Stan. So yes, it's certainly trending in all the right directions. In terms of share, we do get a premium for advertising. Our rate is higher than our competitors, and that again is a result of the fact that we introduced a data proposition 5 years ago that our competitors are only starting to introduce today.

Your next question comes from Lucy Hung with Bank of America.

So I have 3. So just firstly on Stan Sports, so it looks like there's a bit more competition coming into the sports streaming space. So just wondering how you're thinking about the rising number of new entrants and also how this may impact what the right cost in the future and maybe the strategy on how Stan puts on the position itself from its competitors. And then secondly, just wondering if you've seen any revenue impact from the shift in the Australian Open from January to February in the Free To Air ad market. And then thirdly, just with the cost out targets, I think last time you mentioned that around 80% -- or initiatives are in place to achieve 80% of the cost out target. Just wondering how has that increased over the last few months.

No problem, Lucy. I'll do 1 and 2, and then I'll hand over to Maria to talk about our progress on the cost out initiatives. So on question one, Stan Sport competition, I mean, we had a pretty clear strategy that we wanted to acquire at least more than 1 sport when we started, and you'll see that's when we had the rugby, plus we were able to acquire a couple of really significant tennis events, the majors for this year. So we're pretty happy with where we are now. And I think what's interesting about that market, you talk about what will happen to rights in the future, there was always going to be a bit like our plan, right? Our strategy shift from FTA and reliance on FTA for rights to pay and then to on-demand, I guess, is supporting those rights in the future. And that's really just a factor of audiences moving to wanting to consume through streaming platforms increasingly as time goes on. So will you see an explosion of rights cost? I don't believe so. But you will see a shift in who bears the composition of those rights. So a bit like -- even in entertainment, right, we're seeing the licensing cost of entertainment content on Nine come down. Obviously, that's being shifted to an on-demand environment. We've been playing in this space now for 5 years. We know the game. We know how to manage our investment to get the right results and to do that in a really technical and scientific way. And I think we've been playing in that space much better than, again, our competitors. We saw a recent thing where Netball, of course, went back to Foxtel and Kayo. Again, it was a decision on our part. That was something that we wanted to be part of. They've been a great part of our business. But at the price that was being touted with, I guess, as well, if you think about our theory, when we like to have all rights and play a role with the sport rather than just be a broadcaster, that wasn't where that sport wanted to go. So we were -- we're outbid by another party. Again, that will happen. We will be rational about the decisions that we make, focused on all of those 3 divisions and focused on long-term profitability. In terms of the impact of the AO, yes, there'll be a market impact in January. Obviously, with no AO, that would be a negative for the Free To Air market in January. We expect that, that will be rightsized when we go into February. There will be some impact on Nine. Obviously, our share in January will be down. Our share in February will be up. We will already do a strong share in February because of our Married at First Sight. But we agreed a deal with Tennis Australia to sort of compensate us for that shift, which we're very happy with. And in hindsight, the deal that we're able to reach with Tennis Australia was largely reflective of what played out. So we're very thankful to them for helping us through that process. And obviously, it impacted sort of audiences through that period as well. But we would expect it to return to its, obviously, base back in January 2022 and for that shift to come back. So I don't think this change is significant. You're looking at sort of $10 million over the 2 months, I think. Cost out, Maria has been doing a lot of work on this. So Maria, I'll hand over to you on the cost out.

Thanks, Hugh, and thanks, Lucy. Yes. So we're well progressed on our cost out targets. I think we said that we had plans for 80%. By the end of this year, we will have executed on 80% of the savings. And we have firm plans on the remainder over '22 and '23 as we execute on some of the structural changes to agreements and bring through the efficiencies of changes we've made this year. So we are very pleased with the way that's going.

Your next question comes from Eric Choi with UBS.

First one, just around the balance sheet. I guess there's been some press speculation on Domain participating in a Pexa bid. In that situation or any other future M&A situation, I just wanted to get your thoughts on what gearing NEC would be comfortable lifting back up to, whether there's any appetite to raise equity, I guess, versus the alternative of seeing your Domain stake diluted. Then secondly, no one else has asked on Google and Facebook yet, so I'll give it a stab. I think we used to think the number was potentially circa $30 million, but with the press speculating, your peers to get close to that number already. Should we be thinking there's upside you can negotiate an outcome above that $30 million now? And then lastly, long-winded one on TV. I guess you guys have said market growth low to mid-single-digit in third quarter '21. Let's assume you keep share pretty flat. In that scenario, does TV revenues get back to the March quarter revenues from 2 years ago? I'm just trying to get a sense of if TV is already on track to get back to that second half '19 revenue baseline or if there's still some work to do.

Thanks. Look, I'll answer Google, Facebook. I'll start on Domain and the balance sheet, and then I'll hand over to Maria, just on the TV '19 numbers. So in relation to Google, Facebook, I guess, great that we saw the Facebook returned to the table and reengaged with media companies, including ourselves. You saw an announcement from Seven about a letter of understanding. I think what you'll see from us is engagement with the platforms. We will be announcing deals when they are concluded and binding. And at this stage, we're still obviously proceeding with negotiations. It is really positive for our business and positive, particularly for the publishing business, you'll see we've introduced a subscription and licensing line in that result for future years, so you'll be able to track that number. And in terms of the $30 million or at least $30 million that we've spoken about before, you remember, that was a bit of a combination of things, right? We had a deal with Google before, called Project Mercash, which sort of underpinned the Fairfax assets, I guess, digital ad revenues at the time. That's unwinding as we go into this calendar year. We've done some things over the course of the last 6 months to make up part of that difference, so that's sort of been going on. And then in terms of the increment that Google and Facebook, we would see, we think, obviously, that we will exceed our previous estimates quite comfortably. But as I said, we will announce those results when those deals are concluded. In terms of the balance sheet, obviously, a strong balance sheet. About -- we will either continue to look at opportunities to return money to shareholders or if there are opportunities for us to make acquisitions that we think are accretive for shareholders in the long term, we will continue to look at those. I think I'll leave Domain to comment on the Pexa rumors, and we won't cover it here. But Maria, I think just going forward, looking at that balance sheet flexibility and the cash flow the business is generating, obviously, you have some plans or some thinking around that. So I'll hand over to you, yes.

So yes. So on that, Eric, obviously, we're in a really strong financial position, and we now have no immediate plans to invest externally. We're currently looking at the options we have to really enhance our portfolio of assets further, as you've seen with the growth that we're seeing in our growth assets. We're assessing the best use of our capital and clearly committed to our shareholders and the strong dividend payout policy, and we'll continue to evolve that.

And in terms of TV revenue, '19 versus '21, I guess, March quarter, talk about technical, yes.

So I think...

I'm sure you can do the numbers yourself, Eric. You know what the numbers were.

I think we're expecting the market still sitting. There's still room to go. I think we're about 5% below '19 in our projections of Q3.

Yes. I mean the best thing about our balance sheet, we will be very disciplined like we are with content acquisition. As we've said many times before, we've got the suite of assets that we need to run this business going forward. We've got a great growth profile with the assets that we have. We will not do deals that would not be accretive for shareholders, and we will remain disciplined around that.

You next question comes from Entcho Raykovski with Crédit Suisse.