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

Good morning, everyone. Thank you for joining us for our full year '21 results briefing. I'm Mike Sneesby, CEO of Nine Entertainment. And joining me today is our CFO, Maria Phillips. Today, I'm pleased to announce a strong result for Nine for the year to June 2021. Notwithstanding a difficult first quarter, we've reported a healthy 43% increase in EBITDA with growth across all of our key television and publishing businesses. The recovery of the advertising market is providing strong positive momentum across the business. What started in late September in television built throughout the year with clear evidence of recovery now in Publishing and Radio. It's also worth noting that for Free to Air television, our metro ad revenue for the June half was around the same level as the second half of FY '19, suggesting there could be some positive structural trends occurring. Our content performance across the year speaks for itself. On all of our television platforms, Publishing and Radio, Nine recorded strong audience performances as we continue to focus on premium local content made for the Australian market. Growth in audience and revenue for 9Now, combined with our momentum in Free to Air, highlight an important inflection point for Nine where we expect to be able to maintain positive growth across the TV combined revenue stream through the cycle. I'll touch on that in a bit more detail later. During the year, Nine finalized significant content deals with Google and Facebook following the passing of the News Media Bargaining Code. We congratulate the Australian government on taking a global leadership position on a matter that is important for all Australians. These agreements will ensure that we're fairly compensated for our journalism and our content, delivering ongoing revenue streams for our business, and enabling us to continue to produce the highest quality of news, journalism and editorial content. In February, Stan led the SVOD market into live streaming with the launch of Stan Sport, making Stan, Australia's largest subscription streaming platform to deliver live content. The launch of Stan Sport was enabled by the positioning and scale of Stan's entertainment business, and it puts Nine in a unique position in the television market as the only business that can deliver the full depth of coverage through subscription on Stan Sport combined with the broad exposure across Free to Air maximizing both reach and revenue. Stan Sport has consistently reached or exceeded all internal milestones through this launch process. And I'll touch a bit more on Stan and Stan Sport later on. Through strong growth in revenue and a tightly managed cost base, Nine has finished the year with a net debt of just $171 million equating to leverage of around 0.4x. The strength of our balance sheet provides us with strategic optionality, which we continue to actively assess. We remain committed to maximizing long-term returns for shareholders, whilst maintaining financial strength and flexibility. We continue to focus on cost management, refocusing our spend as the business becomes increasingly digital as well as balancing our investments with market conditions. There are inherent opportunities through this process to realign the cost base consistent with our long-term growth aspirations, particularly in Television Combined and in Publishing. On Page 5, you'll see the performance of the various parts of our business and the obvious benefits of our portfolio of assets, both in terms of diversification of earnings and increasingly the benefits of cross-platform synergies. In particular, our television assets reported strong growth, Nine Network as well as 9Now and Stan each with different drivers. On a total television basis, EBITDA grew by 66% or more than $145 million. The chart on Page 6 highlights Nine's progress as our business moves to a more digital base. Across the year, we reported strong growth in revenue and EBITDA from our digital combined businesses, so that's 9Now and Stan as well as the digital components of both Publishing and Domain. Digital revenue increased by around 19% to more than $850 million, while EBITDA grew by 41% to $248 million, inclusive of the $33 million investment into Stan Sport. The pandemic has had a material impact on consumer behavior, shifting more and more activity online and within the home. We expect that these trends will have a lasting impact beyond the current period, having effectively accelerated the change in the way people consume content. These changes have enabled Nine to expedite the successful transition of our business into digital businesses while managing costs to establish strong margin profiles and investing in opportunities to accelerate the digital shift. At this point, I'd like to ask Maria to talk through the group financials in greater detail. Maria?

Thanks, Mike, and good morning, everyone. Nine reported group revenue of $2.3 billion, up 8% on PCP and group EBITDA of $565 million, which was up 43%. These results incorporate the negative $1.6 million impact of the IFRIC-related changes to interpretation of AASB 38 accounting for cloud-based costs. Pre-IFRIC EBITDA was $566 million, and details of this are shown in Appendix 1. Full year growth of 43% was consistent with the first half of 42%, albeit with markedly different drivers as the COVID cycle continues to play out. Group net profit after tax and minorities was $261 million, and we also reported a net specific item cost of $94 million. On a statutory basis, net profit for the year was $184 million. The Board has approved the payment of a fully franked final dividend of $0.055 with this result, which coupled with the interim result of $0.05 totals $0.105 per share. This equates to 69% of net profit after tax and before specific items, which is consistent with our previously cited range of 60% to 80%. Slide 9 details the composition of specific items, which together totaled a cost of around $109 million pretax. The majority of these specific items were noncash with the largest component being the write-down in carrying value of our Radio business. The Radio market has been slower to recover from the impacts of COVID than other segments to date, which has resulted in a write-down in this carrying value of $62 million with the result. Other key components included the cost of the implementation of finance transformation, which effectively brings 3 legacy finance systems to 1 and the tail of duplicated leases through the consolidation of our Sydney premises to 1 Denison Street. 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 year, operating cash was $443 million, excluding the Domain group. Cash conversion was 96% with the market recovery impacting on working capital, as you can see from our balance sheet. And we're now through the peak of the CapEx cycle with FY '22 levels estimated at closer to $65 million to $75 million. On Page 11, we have reconciled net debt of the wholly-owned group from the starting position at the 1st of July of $291 million to the $171 million we've reported for the end of June. Beyond the operating cash flow movements from wholly-owned businesses, Nine distributed dividends of $119 million to shareholders. CapEx was $76 million, of which $25 million related to the relocation of Nine Sydney offices to 1 Denison Street and Nine also resumed its PAYG tax payments, which had been deferred during COVID. So there was an element of catch up, particularly in the second half number. On a wholly-owned basis, our leverage at the end of June was around 0.4x EBITDA, leaving us plenty of liquidity headroom and remaining comfortably below our banking covenants. So now let's look at the divisional results. Starting with our Broadcast division, which comprises our TV Combined business and 9Radio. Together, Broadcast contributed around 57% of FY '21 group revenue and 61% of EBITDA. Focusing first on TV Combined or Nine plus 9Now. Overall, the combined market grew by 14% to $2.9 billion, Nine attracting a market-leading share, which resulted in Television Combined revenue growth of 12%. The cyclical aspects of the advertising market, the underlying growth in BVOD and further overall cost reductions resulted in EBITDA growth of 73% for our TV Combined business. Page 15 steps through the performance of the Free to Air component. The Metro Free to Air market bounced back strongly through the first half, resulting in total market revenue growth of 11.5% for the year. Nine's Free to Air revenues for the year were more than $1 billion, growth of 10% on PCP with a share of more than 40% in the second half. Across the year, Nine's premium revenue was 18% higher than FY '20. Reported Free to Air costs were 2.5% or around $20 million lower than FY '20 resulted in -- resulting in EBITDA for the year of $251 million, which was up 82% on PCP. The chart on Page 16 gives a bit more detail on Free to Air costs showing the key deltas on FY '20. FY '21 benefited from reduced spectrum charges and some license fee relief relating to the delay of the Australian Open, both of which will return in FY '22. The second half was also impacted by the return of the normal schedule for NRL, offset by the absence of any cricket in the year and some broad savings across local and international content. We mentioned sales-related costs before, including sales incentives and bonuses, and these were clearly higher than both FY '20 and our earlier expectations given the market strength. On a reported basis, costs were down by 2.5% which equated to a decline of 4.4%, excluding these revenue-driven costs. Turning to Slide 17. 9Now continued to perform strongly and consistently across the year with revenue growth of 46% and EBITDA growth of 48% to $73 million for the year. You'll notice that we've restated FY '20 revenue as detailed in Appendix 3. Effectively, this brings the way we report our digital revenues in line with other divisions. So on a basis, net of agency commissions, rebates and incentives and this restatement had no impact on reported EBITDA. 9Now recorded growth in all key metrics, including daily active users up 13% and 39% growth in live minutes. This positive momentum continued despite the absence of the Love Islands, both Australia and the U.K., which historically have been key content for 9Now as well as other COVID-related content disruptions. The BVOD market grew by 55% across the year. We estimate that BVOD now accounts for just over 10% of the total digital video market, which is a better representation of the scale of the opportunity for 9Now. As audiences have grown, 9Now's focus is more clearly on the balance between sell-through and yield and a better utilization of our data resources. In FY '21, 46% of our 9Now sales attracted a premium due to data. That's up from 40% at the half and that's 75% growth on a million-dollar basis from FY '20. Mike will touch on the opportunity relating to mine now a little later. The recovery in the Radio market has lagged Television, but there were clear signs of improvement through the second half with Nine's radio ad revenues up 13%. Nine's share of agency revenues performed well across the year with growth of around 3 percentage points. However, this was offset by a reduction in direct share. Overall audiences grew by 11% across the year, importantly, including growth of 14% in the 25 to 54s, Nine's key agency demographic. Moreover, the cost base has been significantly realigned, and there are clear signs of positive trends in direct sales, which augurs well for improved results as the market recovers. Wrapping up the total television story, we'll turn to Page 19 and look at Stan. Stan has now hit 2.4 million active subscribers with Stan Entertainment on a clearly positive earnings trajectory. Revenue growth of 29% reflected both the higher subscriber numbers as well as the positive impact on ARPU of the Stan Sport launch. ARPU in the June quarter, so post launch increased by 7% on the PCP. And excluding Stan Sport, Stan's costs were up by about 13%, primarily reflecting the start of the NBCU output deal. Stan Sport launched during the second half with $33 million of related costs. Overall, Stan EBITDA was $40 million, up 27% on PCP. And excluding the investment in Stan Sport, Stan Entertainment EBITDA would have been around $70 million. Mike will also touch on Stan in a little more detail in a moment. But suffice to say, we are very pleased where all the key operational metrics are heading. Moving on to Page 20. The Publishing business contributed around 22% of group revenue and 21% of EBITDA for the year. As with 9Now, we have restated FY '20 revenue for the Nine digital businesses, Drive, Pedestrian and nine.com.au as detailed in Appendix 3 to be consistent with the way we report other divisions. Again, there is no impact on EBITDA. Our combined Publishing business now derives around 56% of its revenue from digital sources and more than 30% from subscriptions. Both of these are key to the longer-term growth of the business. Proceeds relating to the News Media Bargaining Code will be categorized as licensing, and this will impact from FY '22. Digital subscription and licensing revenue grew by 20% to more than $100 million across the year with digital subscriber numbers growing across each of The Herald, The Age and the AFR. The business continues to focus on driving deep engagement amongst the audiences most likely to subscribe. Print retail revenue declined largely due to the COVID impacts on hotels, airlines, employment and CBD retail. And Publishing has reached a similar key inflection point to television, with digital subscription growth in this result outpacing the print decline, of course, with a very different cost base, meaning the profitability of each incremental digital subscriber dollar is markedly higher than a print dollar. Digital advertising revenues across Publishing benefited from the cycling of COVID lows recording growth of 9%, notwithstanding the loss of the Google sales agreement from March, while print ad revenues stabilized through the second half despite key categories of travel and luxury goods remaining weak. The decline in other revenue reflected the sale of Weatherzone and the reduced events activity in the period. And overall, Publishing costs were down by 9% or $40 million. Printing and distribution accounted for the major component of cost reductions, the bulk of these related to renegotiated arrangements. More broadly, Publishing has managed its cost base effectively in the context of the ongoing challenges of the print ad market. In total, Publishing reported EBITDA of $117 million, which was growth of 28% on the prior year. And Domain reported last week, and Page 21 summarizes that result. Suffice to say, the property market, particularly in Sydney and Melbourne, rebounded strongly through the second half of FY '21, which clearly benefited Domain. The result was underpinned by 21% growth in residential revenues. This is a function of national listings market growth of 11%, coupled with an 11% increase in controllable yield. The market recovery similarly benefited Domain's Media, Developers and Commercial and Agent Solutions businesses, the latter also reflecting the accelerating rollout of real-time agent. Total costs increased by 6% with higher staff and insurance costs, offset by efficiencies in promotions, production and software. And reported EBITDA grew by 21% to $101 million. I'll now hand back to Mike for a few comments, including an update on current trading.

Thanks, Maria. Well, we've covered a lot of ground at Nine in my first 100 days as Chief Executive. While closing out the financial year with the strong result and financial position that we've announced today, we've also been setting the wheels in motion on our plans for the future of the business. As I've spent time with the team across all business areas and geographies, I've never been more excited about the opportunity for Nine and the team that we have in place to cement our position as Australia's media company. Be it news, sports or entertainment, Nine's focus is on creating amazing content. We are the only media company in Australia to have distribution capabilities across broadcast, streaming, publishing and consumer marketplaces with established brands that Australians trust. Across all of these platforms, we have opportunities to grow our business, both in terms of footprint and profitability. In Nine and 9Now, the acceleration of live streaming and our focus on content gives us an opportunity to expand our core audiences as well as our television combined revenues. Through the expansion of 9Now to the full suite of Internet-enabled devices and further development of our products, supported by the consumer tech cycle, we are well placed to take an increasing share of the overall digital video market. For Stan, we'll ensure our long-term success through content. Whilst international studio content has been instrumental in Stan's success to date, we will continue to focus on expanding our ownership and control of content, doubling the volume of Stan originals in FY '22, combined with continued growth in live streaming and Stan Sport. In Publishing, further growth in reader revenue and more particularly, digital subscription and licensing revenue is key. This will be achieved by focusing on the content that resonates most strongly with our current and potential subscriber base as well as ensuring an optimal consumer experience through continued enhancement and features available in our apps. We are committed to our investments in Domain and Drive, and we'll continue to find new ways to support and grow value through their marketplace expansions. We've recently bought out the minorities in Drive to give us the ability to realize that potential while we also continue to support Domain's growth strategy. This result has also shown clear evidence of 2 key inflection points for the business. Firstly, as Maria stated earlier, in Publishing, digital subscription revenue grew by 20% to more than $100 million. This growth outpacing the circulation declines associated with print, which is key to the longer-term position of our Publishing business. Secondly, as illustrated on Page 24, we also believe that the current scale and growth trajectory of 9Now will result in TV Combined revenues being in long-term growth. As live streaming continues to grow in relative importance, the way we look at our content decisions are also being refocused through this lens, also enabling further development of a seamless TV Combined sales proposition. With the imminent launch of VOZ providing real data on incremental reach and co-viewing, we expect there'll be a natural benefit to advertising yield. And through technology and products, we'll improve both our consumer and advertising experience, supported by the enhanced utilization of our data capability. Through Nine, 9Now and Stan, we have the optimal distribution platform for all video content, reflecting Nine's total television strategy. This combination of established and profitable assets gives Nine Australia's only scale platform across Free to Air and subscription television. Content remains key to our business, and Nine can optimize the distribution of that content to deliver for every audience. We can break important news across multiple platforms using our vast capability in journalism and our editorial assets. We can make dramas and reality shows designed to talk to targeted audiences or entertain the masses. A great example of the benefit of total television is the story we broke last week, investigating Australia's Neo-Nazi movement. That story broken the age in The Herald, the same day it featured on 60 Minutes, and it's now confirmed for a documentary to air on Stan later in 2022. And of course, in sport, this benefit is clear. The launch of Stan Sport represents a unique opportunity to leverage Nine's Free to Air distribution, combined with Stan's subscriber base to rapidly scale a subscription sport business. A key pillar in Stan's long-term strategy to develop scale and profitability as a pure-play SVOD service before moving into live streaming and live sport was realized with the launch of Stan Sport in February this year. The scale and efficiency of Stan's subscription platform reaching over 6 million households across active and inactive accounts with payment credentials has allowed us to rapidly establish the business. Stan Sport reached a subscriber milestone of over 250,000 subscribers just months after launch, driven by rugby and tennis content alone, with Stan Sport also set to become the home of the world's premier football competition, UEFA, after the deal was announced in June. Stan Sport is already demonstrating its contribution to strong growth in Stan's broader business with overall subscribers at 2.4 million and growing ARPU. Page 26 shows some of the key metrics reached by Stan Sport since its launch in February. As you'll see, it's pretty clear Stan Sport has delivered both in terms of its own business model, but also for the broader Nine Group. Of particular note, Stan Sport quickly achieved the milestone of 250,000 subscribers many of whom have never subscribed to Stan before. On average, Stan Sport has added almost $11 of revenue per subscriber, resulting in a 7% higher ARPU across the whole Stan subscriber base. And Stan Sport has also added incrementally to overall engagement with sports subscribers viewing around 20% more than the average Stan Entertainment subscriber. In combination, these measures contribute to reducing churn and hence, they are accretive to the lifetime value of our subscribers. As shown on Page 27, Stan Sport has also enabled us to broaden the availability of sport on Nine and 9Now with really pleasing results from both tennis and rugby today. Of course, helped by Ash Barty's success at Wimbledon this year, a success which we are confident the wallabies will use as inspiration for their ongoing international campaign. Across Stan Sport, Nine and 9Now, we're able to program a number of select games or competitions for a broader free television audience while retaining full coverage ad-free for our premium subscription audience. This combination delivers reach and promotion of the sport while maximizing our opportunity to commercialize the rights. During Wimbledon and the Wallabies France Rugby Test, it meant Nine won the week for total people and the demos, adding more than 2 points of estimated share to the network for a fraction of the total rights cost, while at the same time, Stan Sport also delivered on its subscription targets. We finished FY '21 with strong operational momentum, due both to the underlying advertising market and our relative positioning within it. We have reached key inflection points in our Television and Publishing businesses and can clearly see incremental growth opportunities across the whole business. Underpinned by the strength of Nine's cash flows and balance sheet, we remain committed to healthy dividends for shareholders, and we are also open to long-term investment opportunities that align to our growth strategy. Our business has fared well through the changing landscape presented by the global pandemic. We have been quick to adjust and position ourselves to capitalize on the changing consumer behaviors, particularly in our digital businesses. At Nine, we are moving forward with a clear vision as Australia's media company. On that note, I'll turn to current trading. Nine started the new financial year strongly, well supported across our platforms by advertisers from all categories. In the current quarter, Nine's Metro Free to Air ad revenue is expected to be up almost 20% on the same quarter last year. Forward bookings remain ahead of same day last year, with positive market momentum continuing into Q2, notwithstanding more difficult comparables, including the timing of the NRL. The Free to Air market has recovered more quickly and convincingly than previously expected. FY '22 will see the return of some cyclical costs. Nine currently expects Free to Air cost in FY '22 to be around 3% higher than FY '21. 9Now continues its strong growth trajectory with around 70% revenue growth in July on PCP. Nine expects positive momentum to continue through the rest of FY '22 as 9Now establishes its place in the broader digital video market. Notwithstanding the short-term impact of the lockdown on the radio market, 9Radio's Q1 ad revenues are expected to be up in the double-digit percentages with further share improvement across both agency and local ad sales. Coupled with 9Radio's restructured cost base, this is expected to underpin strong profit leverage as the ad market recovers. Nine's subscription businesses have again benefited from recent lockdowns. Active subscribers and ARPU have continued to grow at Stan driven by new entertainment releases as well as Stan Sport, resulting in a current revenue run rate of more than $340 million. Following its successful launch in February, Stan Sport's early metrics have been consistently ahead of expectation. Nine believes there is significant long-term growth potential for SVOD broadly and Stan specifically. Total cost for Stan Sport in FY '22 are now expected to be at the lower end of the $70 million to $90 million range previously cited. Whilst this investment will reduce Stan's EBITDA in the short term, in FY '22, combined EBITDA for Stan Entertainment and Stan Sport is expected to be in the low double-digit millions of dollars. Over the medium and long term, it's expected to significantly grow earnings. Digital trends in Publishing are expected to continue to improve with Q1 digital subscription revenues expected to be up by around 9%, driving further growth in reader revenues. From 1 July, Publishing will reflect the benefit of the recently announced deals with Google and Facebook, resulting in incremental revenue through the licensing of news content to the digital platforms. As previously announced, Nine expects growth of $30 million to $40 million in publishing EBITDA in FY '22 over FY '21. As Domain commented with its result last week, notwithstanding the short-term interruption of lockdowns, the underlying property market appears resilient and is expected to bounce back once restrictions are eased. Nine is entering FY '22 with low debt and strong cash flows. We will continue to focus on optimizing the performance of our unique and complementary assets, both through measured investment and cost control. So I think I've said enough for now. Maybe we'll open the lines. Operator?

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

Just 3 questions from me, please. Maybe just starting on those FY '22 outlook comments. The TV trends do sound pretty healthy. But talking about a decent decline in Stan EBITDA, do you think those earnings deltas are going to be able to offset each other in '22? Or do you think the Stan investment is probably a bit too great for the TV revenue trends? Secondly, just the Stan Entertainment sub numbers and this looks like it was flat in the half. Just interested if you could talk about whether you saw any benefit from the COVID lockdown sort of July, August and some of the promotions you were running that maybe gave a bit of a late kicker to that number? And then finally, just the BVOD growth, 70% in July. Was there anything funny in the PCP? Or can you just talk a bit more about what's driving that very strong number?

Okay. Thanks, Kane. Well, why don't I just run through each of those. Always good to get a triple [ bugger ] question right off the bat. So hopefully, I've got all of the information there. Your first question in relation to EBITDA in our Free to Air business and Stan in terms of that decline in EBITDA, the guidance we've given looking forward. I think I'd separate the 2 things and look at Stan Sport and Stan as Stan Entertainment as 2 separate businesses. Obviously, the guidance going forward is that we will be making that investment into Stan Sport, which obviously is reducing EBITDA of the overall Stan investments -- or of the overall Stan business, I should say. In terms of how that looks against Free to Air TV, look, I think we won't give any specific guidance around that EBIT number. The next question, I think, was in relation to Stan Entertainment. Did you catch that one, Maria?

Yes, subscriber numbers.

And so maybe just repeat the second question then, Kane, if you don't mind.

Sure, Mike. Just the entertainment subs look like it was flat in the half. I'm just wondering if you had any COVID lockdown benefits in July, August that were in that number. And I know you're running some promotions sort of in the lead up to August as well that might have helped. So just what you're seeing in that market?

Yes. So in the second half, at the half year, you'll probably recall, we gave guidance in terms of the trajectory of the subscriber business post COVID lockdowns and an expectation that you'll see a level of flattening off in the overall base. What you've actually seen is a net growth in Stan subscribers in the second half. There will be a little bit of influence of these lockdowns coming back in the back end. But that underlying growth that you've seen in the second half is more close to what we'd expect in terms of the subscriber momentum. In terms of the BVOD numbers, specifically, we're talking about the July number on PCP. Look, there's obviously changes in programming in every year that sort of flow through in our schedule. But there aren't any significant impacts on our schedule that would be an anomaly in that year-on-year growth number.

Your next question is from Eric Choi from Barrenjoey.

Congrats on the first result, Mike -- for me, unfortunately. First one, just on that trading comment of plus 20%. I guess if I apply that to SMI data, it sort of implies your TV revenues might be flat on that FY '19 baseline. I guess there's a few moving parts because, obviously, there's the Olympics on 7, but you guys have sort of shifted State of Origin forward. So it's a bit messy. I guess the question is, how do you feel about maintaining that sort of FY '19 baseline level of TV revenues for the remainder of the year? Second question, just on some of these long-term benefits potentially from Stan Sports in terms of sort of capturing new sports rights. I'm just wondering how do we think about that? And does that help in sort of your renegotiations on the NRL rights? And then just a last one maybe for Maria. I just noticed in the appendix -- very helpful, by the way, just some of the items in terms of CapEx and D&A have changed versus first half '21. CapEx is a bit higher. D&A is a bit lower. Just wondering if you can talk to the drivers of that, please?

Yes. Thanks, Eric. Why don't I cover off your first 2 questions, and then I'll hand over to Maria to talk more on your third. In terms of the Free to Air market now television momentum. As you say, the 20% in the Free to Air TV space and the guidance we've given as we roll into Q2. Look, I think it's a little bit early to be talking about what the full year looks like, and we're not going to give a view right through. Suffice to say, I think if you run your numbers on that and you imply what the Q2 might look like in terms of momentum, we're certainly around those levels of FY '19. Of course, that's really positive recovery and momentum overall. But I think let's hold and see how the second half unfolds. In terms of Stan Sport and its longer-term strategy, the potential to play a part in an NRL rights deal. Look, without going into anything specific around NRL and what a deal with the NRL might look like, I'll just reiterate what we've said in terms of the presentation today. Our assets and our platforms across both subscription and Free to Air do put us in a very unique position when it comes to being able to commercialize sport efficiently, whether that plays a part in NRL world, we're yet to see. I might hand over to Maria for question 3.

Thanks. I think, Eric, the sort of D&A and CapEx is the timing of the halves is just a bit unusual with the move to 1 Denison Street and effectively just timing [ that come up ] some of our CapEx spend. I think we've given guidance going forward, and we now -- we'll see a more normal trend in both of those.

Your next question is from Entcho Raykovski from Crédit Suisse.

Mike, Maria, maybe to make it easy, I'll ask my questions one by one. The first one around the Stan EBITDA guidance into FY '22, for the low double-digit millions. Are you able to give us any color on what sort of revenue expectations you've got built in into that guidance and what the expected contribution might be from Stan Sport? I guess, I'm just trying to get a feel for whether there's any flex within that, whether you're likely to flex the cost base to get to this number or whether it might be depending on where revenues come out?

So look, in terms of the contributions from each side of the business, I'm not going to dive into further detail on that. Suffice to say, that projection for the full year in terms of where we think we'll end up across the combination of Stan Sport and Stan, as we've said there in that low double-digit millions of dollars, that does accommodate a fully-loaded cost base of the rights that we've acquired to date, any other rights that we'd expect to acquire in Stan Sport through the year and the cost of marketing, et cetera that go along with it. So it's a fully-loaded base, and we don't expect to have to manage the cost in to be able to deliver that number.

Okay. And I guess, as a follow-up to that, is it fair to assume stripping out the Stan Sport costs into '22, that there will be underlying cost growth of sort of more than 25% within Stan as you bring on some of the regionals and also some of the new content deals?