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

Good morning, everyone. Thank you for joining us for our first half FY '22 results briefing. I'm Mike Sneesby, CEO of Nine Entertainment, and joining me is our Deputy CFO, Graeme Cassells, standing in for our CFO, Maria Phillips, who's absent today for personal health reasons. I'd like to start off by acknowledging the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders, past and present, and extend that respect to all First Nations peoples today. For myself, I'm on the land of the Cammeraygal people of the Eora Nation. The strength of the results we're about to take you through reaffirms Nine as Australia's leading media business with strong contributions from all parts of the company, both in terms of strategic vision and operational execution. Our focus on reaching key audiences across all platforms has positioned us very well to take advantage of the strong market conditions and the continued shift in audience behavior to greater consumption through digital devices. Our strategy allows us to deliver the stories that matter to Australians across multiple platforms, providing a clear point of difference for audiences and advertisers. We are delivering, and we are market leading. So let me give you some of the highlights. Our content performance across all platforms has been exceptional. Our television business won the ratings in 2021, excluding the Olympics, and dominated the key demographics with programs such as The Block, Lego Masters and Parental Guidance. Importantly, we led the market for total revenue in the year even when you include the Olympics. Our free streaming business, 9Now, grew livestreams by 75% as audiences continue to embrace the platform as their preferred means to watch our live and linear content. Our total television audience strategy focuses on the key demographics that advertisers buy across all platforms, a strategy which is designed to maximize the revenue and margin from our content investments, a strategy which enables us to outperform the market. We've started 2022 with a bang. The Australian Open was remarkable, and the new series of Married at First Sight is delivering year-on-year actual audience growth across total television with 9Now audiences up 25% to almost 30% of total audience. In radio, Ben Fordham has delivered 2GB's best breakfast result in more than a decade, while Deb Knight finished the year with the #1 afternoon show in Sydney. Local morning radio is dominated by outstanding results for Neil Mitchell at 3AW and Ray Hadley in Sydney and Brisbane. Ross Stevenson and Russel Howcroft continue to dominate the breakfast slot for 3AW. And in Brisbane, 4BC finished 2021 with its best ratings in 13 years with our breakfast host, Neil Breen, attracting more listeners with every survey; and the team at 6PR are leading the market in talk radio. Our publishing business has also tapped into the huge appetite across Australia for quality news and information. The Sydney Morning Herald, The Age and the Australian Financial Review have more paying subscribers than ever before, with publishing notching up its second biggest half of digital subscriber growth on record. Our streaming service, Stan, continues to grow with key investments, including sport performing above expectation. Stan's original slate is delivering more content than ever before with the summer lineup that set new viewing records. The strength of Stan and Stan Sport subscriber numbers underlines the broader work we're doing with audiences across Nine, building new businesses and creating value. There's a common theme to our success. We understand the importance of amplifying and sharing the stories that Australians want to watch, read or hear as we continue to define what an Australian digital media company looks like. These results demonstrate the significant impact that Nine has across audiences and advertisers with content and sales strategies that are well structured and aligned. It allows us to take a greater share of the market when market conditions are strong, as they are now, and puts us in a stronger position if the cycle turns. From this position, and coupled with our strong balance sheet, we'll continue to look at investment opportunities where they make strategic and financial sense for Nine. I'm very proud of what our team has achieved. Turning now to our results. Today, we've reported an impressive 15% increase in EBITDA with record H1 results from both broadcast and publishing as well as significant investment and operational milestones at our key growth businesses of Stan, 9Now and Domain. On Page 4, 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 this period, as the profitability of our core businesses grew, we also focused on investing further in our longer-term growth assets. The chart on Page 5 highlights Nine's progress as our business moves to a more digital base. Digital revenue increased by around 30% to almost $550 million, while digital EBITDA grew by 31% to almost $190 million for the half. Nine is in a unique position in the Australian media industry. Our strategy is delivering increasingly diverse revenue streams from both consumer subscriptions and advertising, and that strategy is well progressed with critical mass across all operations as we define what it means to be an Australian digital media business. At this point, I'd like to ask Graeme to talk through the group financials.

Thanks, Mike, and good morning, everyone. Nine reported group revenue of $1.3 billion, up 15% on the prior comparable period; and group EBITDA of $406 million, which was up 15% and ahead of the circa 10% growth we cited at our AGM in November due to the ongoing momentum in both advertising and subscription businesses. Group net profit after-tax minorities and before specific items was $213 million, up 20%. We also reported a net specific item cost of $12 million, of which $9 million pretax related to Domain. On a statutory basis, net profit for the half was $213 million. The Board has approved the payment of a fully franked dividend of $0.07 with this result, which equates to 56% of net profit after-tax and before specific items. This is an increase of $0.02 per share or 40% on the $0.05 paid in the first half last year. Slide 8 details the composition of specific items which, together, totaled a cost of around $16 million pretax, the majority of which were covered by Domain in the result last week. The $6.6 million restructuring costs related to the implementation of our finance modernization program, effectively bringing 3 legacy finance systems to 1. On Page 9, we look at operating cash flows, focusing on the wholly owned business, so it ties into wholly owned net debt. For the 6 months, operating cash flow was $311 million, excluding the Domain Group. Cash conversion was 90%. The working capital build of $33 million primarily reflected the high activity levels this half. On Page 10, we have reconciled net debt of the wholly owned group from the starting position at 1 July of $171 million to the $63 million we have reported for the end of December. Beyond the operating cash flow movements from wholly owned business, Nine distributed dividends of $94 million to shareholders, capital expenditure was $27 million, and tax was paid of $61 million. On a wholly owned basis, our leverage at the end of June was around 0.1x EBITDA. I'll now hand back to Mike to add some further color on the divisional results.

Thanks, Graeme. Starting with our Broadcast division, comprising our total television business and 9Radio, which contributed around 51% of group revenue and 60% of EBITDA. Focusing first on total TV, or Nine plus 9Now. For the 6 months, Nine recorded total television revenue growth of 11% and EBITDA growth of 16%. While the advertising market has clearly recovered, we are confident there are positive structural trends occurring. For the half, Nine recorded free-to-air EBITDA growth of 10% to $189 million, resulting in a record margin of almost 34% as we continue to lead the industry in key ratings and underlying revenue share. As mentioned earlier, in survey year 2021, Nine once again won the year in all key demographics on both a network and a primary channel basis. We've been particularly pleased by the performance of our key strips, like The Block and Married at First Sight, and we have had unrivaled success in launching new formats, with The Hundred, Parental Guidance, Snackmasters and Under Investigation all returning in 2022 with even more new exciting formats launching later in 2022. Nine's free-to-air revenues for the half were more than $550 million, growth of around 7% on the prior comparable period. Reported free-to-air costs were 5% higher than pcp, inclusive of a $5 million increase in license fees, while the second half cost increase is expected to be lower. Turning to Slide 15. 9Now continued to perform strongly and consistently across the half with revenue growth of 50% and EBITDA growth of 45% to $48 million. 9Now's strong growth in all key metrics, including daily active users up 55% and a 75% growth in live streams shows meaningful progress as we focus on the opportunity of the broader $2 billion-plus digital video advertising market. Nine's premium content, coupled with the advantage of our first-party database of almost 15 million signed-in users, continues to give us confidence in 9Now's future. We are, quite literally, growing the market and defining the market. 9Radio's ad revenues grew by 15%, ahead of the 13% growth in market revenues. Share growth was driven by agency revenues with Tier 1 agency revenues up in all capital cities. As I mentioned earlier, overall audiences grew by 3% across the half, importantly, including growth of 11% in the 25 to 54s, Nine's key agency demographic. At the same time, we've rightsized our cost base. There are clear signs of a positive trend in direct sales which means that as the market continues to recover, we'll see further incremental growth in profitability. We are really pleased with the performance of Stan across the period. Not only have overall subscriber numbers continued their positive momentum against the backdrop of increased competition, but Stan's ability to retain sports customers through the season has also proven better than expectations. Stan is now through 2.5 million active subscribers, with total subscriber accounts of more than 7 million. Revenue growth of 23% reflected both the higher subscriber numbers as well as a double-digit increase in ARPU driven by Stan Sport. Excluding Stan Sport, Stan's costs were up by around 17%, primarily reflecting the ramp-up of the NBCU output deal. Overall, Stan EBITDA was $22 million for the half. The outperformance relative to previous guidance are a result of better-than-expected subscriber numbers. Moving on to Page 18. During the half, our combined publishing business derived more than 60% of its revenue from digital sources and around 37% from subscriptions and licensing, both key to the longer-term growth of the business. Digital subscription and licensing revenue grew by more than 60% to $85 million across the half, driven by growing digital subscriber numbers across each of the Herald, The Age and the AFR as well as revenues from Google and Facebook. Advertising revenues across both digital and print continued with positive momentum. Digital advertising revenues recorded growth of 7%, more than offsetting the previous benefit of the Google sales agreement, while print ad revenues rebounded strongly through the half with growth in all key categories and the return of travel and commercial real estate. Overall, publishing costs were up by 7% or $13 million, reflecting the cyclical return of some costs like travel and marketing as well as some investment in our products and technology. In total, publishing reported EBITDA of $95 million, growth of 39% on the prior year. Domain reported last week, and Page 19 summarizes their result. Reported EBITDA of $61 million included $8 million of one-off costs relating to Project Zipline and JobKeeper expenses. Underlying EBITDA growth of 53% was underpinned by ongoing strength in the property market and success in driving its marketplace strategy with all key business units reporting growth. The 26% growth in digital revenues was primarily driven by residential, with 14% growth in national listing volumes, coupled with a strong 19% increase in controllable yield. Double-digit revenue growth was also recorded across all other key business segments as Domain continues to deliver on building its marketplace strategy. I'll now turn to current trading. Calendar 2022 has started strongly in terms of both audiences across all platforms and advertisers across all major categories. Nine Network has started calendar 2022 as the clear leader across all key demographics. More than 10 percentage points of share ahead of the next place channel on a prime time primary channel basis in our targeted 25 to 54s and around 7 percentage points ahead on the total people basis, our strongest start to a calendar year in Oztam's history. Reflecting this, in the current quarter, Nine's Metro Free To Air ad revenue is expected to be up by around 10% on the same quarter last year. Forward bookings for June quarter are also comfortably ahead of the same day last year. In half 2 FY '22, Nine expects to record stronger free-to-air EBITDA growth than the 10% reported for the first half. 9Now continues its strong growth trajectory with more than 35% revenue growth expected in the March quarter over the prior comparable period, and we expect the positive momentum to continue through the rest of calendar year '22 as 9Now continues to build its presence in the broader digital video advertising market. As a result, Nine expects total television EBITDA growth of close to 20% for FY '22. 9Radio's Q3 ad revenues are expected to grow in the mid-single digits on a percentage basis, with EBITDA leverage expected to continue to be strongly positive as the ad market recovers. Stan has benefited from a strong summer programming lineup and stickier sports subscribers, with FY '22 EBITDA now expected to be between $25 million and $30 million, which is ahead of previous guidance. Nine's publishing businesses have now reset to a markedly higher base, both in terms of the migration to digital and overall profitability. Q3 digital subscription revenue growth is expected to continue in the low double-digits percentage terms, reflecting a busy news cycle. Together with an improved performance from advertising, both digital and print, and revenue from the digital platforms, 9Now expects growth of more than $55 million in publishing EBITDA in financial year '22 over financial year '21. As Domain commented with its result last week, trading for the first 6 weeks of half 2 reflects strong year-on-year growth in new listings, albeit with tougher comparables from Q4. Domain is expected to continue to invest in furthering its marketplace strategy while retaining a disciplined investment approach with commitment to ongoing margin expansion. In total, Nine is now expecting FY '22 group EBITDA growth of above 22% over financial year '21, the result of which was $565 million. Before we open the lines to Q&A, I'm going to take a moment to discuss some of the key themes that are relevant to Nine in 2022. To do this, I've enlisted the help of a couple of Nine's key executives: our Chief Sales Officer, Michael Stephenson, who I'm sure most of you will know; and our recently announced CEO of Stan, Martin Kugeler. [Presentation]

As we open up some discussion here on the couch in the studio, I'd like to quickly apologize. There's been some technical issues with the stream this morning for some people accessing the video stream, an issue that we've had with our webcast provider in getting that stream out onto the Internet. So I trust everyone is able to join the audio stream this morning. One of the key topics for the media industry at the moment, it's around advertising the market broadly and television specifically and, in particular, what's driving this current strength in the market. What we're finding at Nine in terms of television audiences is that if the content is right, the audiences will come. We've seen clear examples over the past 6 months of Nine shows that are demonstrating positive year-on-year growth across total television. In our last results, you'll recall, we spoke about The Block and the NRL finals, both recording clear growth in total television audiences year-on-year. And following on from that, the Australian Open was also a great success this year, with total television audiences across the 2 weeks of the tournament up by around 50% on the delayed 2021 tournament and up by around 5% on 2020, with 9Now audiences more than doubling on the last year. Season to date, at Married at First Sight, we've also recorded growth in total television audience. Almost 30% of those watching are watching through 9Now, with 60 minutes in 2022 also recording growth year-on-year, more than 10% of average audiences watching through 9Now. So more and more, you're going to hear us talking about our audience and revenue, the numbers across 9Now and free-to-air combined, total television. And that's because it's a direct reflection of how our audiences are consuming the content and it's a true reflection of our television advertising revenues. And to that end, in calendar 2021, Nine has recorded its highest ever year of television ad revenue across free-to-air and BVOD combined. So on the couch with me, Michael Stephenson. Steve, it's a great year. Advertising revenues are strong. How should we be thinking about the strength in the market? And are we seeing a structural shift to television?

Yes, Mike, I think you're right on both fronts. I mean the ad market across all platforms is clearly very, very strong. And we have absolutely seen a structural change in television. Of course, today's television is total television. It's a combination of live, live streaming and on-demand TV together. And as you've mentioned, we have just had a record year in terms of total TV revenue, and that gives me great confidence that we'll see continued growth through the cycle. We -- I think about sort of some of the drivers of that structural change. We are seeing big brands investing in big ad campaigns across our total TV assets from Telstra to Kia, and there are obviously many, many more examples. At the same time, we're seeing growth in almost every major advertiser category. And of course, emerging categories as well. We're seeing growth in home delivery and e-commerce categories, which historically we haven't seen as significant drivers of total market growth. In the last 12 months, on free-to-air TV alone, we had more than 600 new advertisers to that platform. But right alongside that, and maybe even symbolically more important, I think, is that there were 1,300 advertisers last year that advertised on 9Now, but didn't advertise on free-to-air. And for me, that's a really serious proof point that we're moving into the digital video market and making great headways towards that.

Yes. We've spoken about that before at some of these trading updates about the growth of our digital video advertising revenue streams really being part of that much bigger digital advertising market. Maybe turning to some of our assets. We clearly have a unique and diverse set of media assets, giving us significant scale out there in market. You're out there talking to our advertising partners, agencies on an ongoing basis. How important is that scale in differentiating our proposition when you're out there in market?

Well, I mean, first of all, I'm very fortunate that I do get to represent what I believe are the best assets in market every day. So that's a good starting point. But you're absolutely right. Size and scale is everything for brands. Reach is critical. It's the key metric by which all advertising is born. And of course, at Nine, we reach more people every month than anybody else. And that's of great competitive advantage. In any given month, across our television, across our digital publishing and radio assets, we're reaching more than 95% of all Australians. And how does that play out financially? Well, of course, increasingly, you're seeing the deals that we do with brands exist across multiple platforms. In the last 12 months, almost half, almost 50%, of all of our customers access Nine's audiences across more than one channel. And if you kind of reflect back only 12 months prior, that was less than 30%. And of course, as a result of that type of change in advertiser behavior, Nine's ad revenue is growing well ahead of the broader ad market.

Yes. And talking about scale, so we're talking about scaling assets there in terms of our media platforms. But what about signed-in users? We've now got around 15 million signed-in users and growing. How important is that as part of our overall proposition?

Yes. And as I just mentioned, scale for brands is everything. But at the same time, personalization or greater levels of targeting, of course, is becoming equally as important for brands, ensuring that their advertising is both efficient but also more effective. And what we do know, of course, is that third-party cookies are being phased out, and therefore, first-party data becomes increasingly more important. We've got 15 million signed-in users. That puts us well ahead of our traditional competitors. But I think, more importantly, it allows us to compete more effectively with new and emerging competitors, and that allows us to accelerate towards our digital future which, of course, means we need to be looking into the both digital video and digital audio markets. So we're well positioned.

Yes. It's clear that, that data proposition is becoming more and more valuable and more and more important to how we speak to advertisers.

That's right.

So the other key theme that I think is relevant to now at the moment is the strategic importance of content. Of course, content is at the heart and soul of Nine, and we're fortunate to have the best people in the business when it comes to content, across television, radio and in publishing. Our television -- total television business has built its success primarily on Nine's original content from our trusted journalism and our coverage of the greatest sporting events around the world. To Stan though, the equation was originally quite different, with the business historically focused on licensing of international content. Today, that focus has developed significantly as we've executed on our long-term strategy to deliver a greater proportion of our first run slate from Stan original productions and the launch of livestreaming with Stan Sport. On the couch here today, we've got Martin Kugeler, Stan's newly appointed Chief Executive. He's going to give me a little bit more color on the content supply market and our longer-term strategy for Stan. So Martin, maybe starting firstly with that international content, the content that has traditionally been licensed from major studios and distributors. What are we seeing in that market -- in the market today?

Sure. What we see is a global trend of increasing investment in productions and output. And 2021 has been a record year in terms of that, 14% growth year-on-year. And that is across all key markets, the U.S., the U.K. and Australia. The result of that is that more and more content comes to the spot market, what we refer to as a spot market. So content that we can buy outside of existing output deals. And just to give you 2 good examples, currently very successful on our platform. Trigger Point, one of my personal favorites from the makers of Line of Duty and of the Bodyguard and the Janet Jackson documentary. And at the same time, we have built really strong relationships to all our Hollywood partners and international distributors. We have extended in the last 6 months our Lionsgate-Starz output deal, we've extended our MGM output deal, and we have also expanded our Warner deal.

Yes. So it's pretty clear what we're seeing is with that increasing content globally, there's a shift in the way that content is being distributed and certainly much bigger opportunities through independent distribution and those kind of production arrangements. But maybe switching to Stan Originals. We've spoken about that being one of the key pillars of the strategy for Stan. And over the summertime, we've seen some great success as we spoke about in the commentary today. So maybe talk to me a bit about what's the plan and what's coming up for Stan Originals.

Yes, you're absolutely right, Mike. We are very happy with the performance of our summer origin slate and Stan Originals in general. If we look at our most watched feature movies on Stan since we launched, 5 of the top 10 has been originals with Gold, #1; and Christmas on the Farm, #2. So 2 features of the summer lineup. And at the same time, the same applies to our TV shows, 4 out of 10 are Stan Originals again, and all 3 summer originals of this year with The Tourist, Wolf Like Me and Bump season 2 in the top 10. So really, really happy about the performance. And what we announced last year is that we want to have about 30% of our first-run premium slate from Stan Originals, and we are well on track to achieve that target. And just to give you a sense, that is about 2 output deals that we will have as Stan Originals on the platform. And we will be able to achieve that with the strong relationships that we have with producers and with international distributors. The one key example from this summer lineup was The Tourist, which we produced together with BBC and HBO Max.

Yes. So Stan Originals is performing extremely well on platform. And I think that's a really important point. The ramp-up of originals is not just about quantity, it's also about the quality, and we're clearly seeing that in the results.

Yes. Absolutely.

Yes. Maybe changing gears a bit to sport. Stan Sport is obviously, what, just over 12 months on the journey in Stan Sport. Can you give us a bit of a sense how is Stan Sport performing?

Yes. Mike, you touched on it in your presentation. So Stan Sport has exceeded our expectation on subscribers, on revenue and contribution to the business. And that's across all the sports, so rugby, tennis and UEFA football. And that is not only in terms of financials. Also, what we've been able to achieve is more than double the audience for rugby in the first season across Stan and Nine. So that shows what value we are creating for sports codes here in the Australian market.

Yes. Look, it's certainly been a great achievement for the team getting within 12 months the fantastic results in both audience and in our financial numbers that we're seeing in the half year result today. So what can we expect going forward for Stan Sport?

Yes. We have been clear. Our strategy is not become a sport aggregator, very broad. We want to focus on key sports that suit us. That means they have to be financially and commercially viable. So they have to be positive contributing. They have to be premium. They have to drive additional audience growth for Stan. So motor sport, the one that you mentioned in your question that we launched last month, is a great example of that. And then the next big milestone for us is the launch of Stan Event, our first pay-per-view boxing event on Stan, which is a great example of how we, again, with our assets, our subscriber base, our platform and our marketing engine, can generate additional revenue streams, additional ARPU for Stan. So March 23, Turf War, the fight between Sonny Bill Williams and Barry Hall. I'm sure you have that in your diary, Mike.

Fitting that you get a plug in there, Martin. And I think the pay-per-view goes on sale today, right?

Exactly today.

Well, look, before we move into questions, I should also touch on our balance sheet position. We have a strongly cash-generative core business. In this past half, free cash flow totaled $311 million before just $22 million of maintenance CapEx. This strong cash flow is enabling us to invest in the future of Nine. We can see pathways to growth across all of our businesses. And to this end, during the half, we invested around $50 million directly through Stan, 9Now, in addition to Domain's investments. The potential size of the prize is significant. We expect the BVOD market to continue to grow in excess of 30% per annum for the next 5 years, resulting in consistent underlying growth in total television. And we can also see an SVOD market with more than 25 million total subscriptions within the next 5 years. Underpinned by the strength of Nine's cash flows and our balance sheet, as evidenced in the result, we remain committed to healthy dividends for shareholders with a commitment to payout ratio of 60% to 80% of NPAT pre specific items. And we're also open to long-term investment opportunities, investment opportunities that align to our growth strategy. So I think I've said enough now. I'm going to open up the line. So let's hand over to the operator.

[Operator Instructions] Your first question comes from Eric Choi from Barrenjoey.

Great result. I just wanted to drill into the cyclical versus structural elements that you guys have touched on. Number one, specifically for BVOD, you've called out your database of 15 million log-ins. Are we at the point yet where advertisers are substituting your BVOD databases for the digital IDs they've lost from those Apple IDFA changes? And then second question. It feels like these regulatory changes to protect user privacy isn't going to stop, and we're going to get Google [ quickly ] changes next year and who knows what else. My question is, how do you capitalize this, on this on an ongoing basis, given it's going to favor the bigger players with bigger data sets? I'm just thinking about your power ratio, which is already strong. So I guess do you need to pick up more assets and pick up more scale? Just interested in your thoughts. And then lastly, probably the only slight negative from the result was cost performance, I guess. So I'm just wondering how much of that increase in TV cost is revenue related versus, say, content versus, say, CPI inflation pressures.

Yes. Look, I might just take the cost question at the top level and hand over to Steve on your question about the advertising market. So in relation to our costs, I'm not going to go into the breakdown in the results. We spoke about the increase in the cost in this half being driven by the license fee increase. And what you're going to see, obviously, with the strength of our revenue in the market is that there are some costs that are related to revenue, direct revenue-related costs. I think one of the other things to be thinking about as we go forward, particularly with the strength of the advertising market and underpinned by the fact that we're seeing strong total television revenues and strong total television audience, is that we will consider incremental investments into our schedule, incremental investments that are designed directly to give us an immediate return. I think let's hand over to Steve. I'll get you to sort of talk about some of those questions in relation to what's happening cyclical, structural and the signed-in users.

Yes. So I definitely think different parts of our business, clearly, different parts of the cycle. But if you think about total television, as I said earlier on, there has definitely been structural change, and that's largely being driven by consumer behavior. And of course, we were ahead of the curve in terms of ensuring we had the right asset to take advantage of that change when it occurred. Of course, a huge part of that is having a first-party data asset. And Eric, as you rightly pointed out, third-party cookies are being phased out and those media companies that don't have a significant first-party data asset at scale will be challenged into the future. I do believe that there will be changes to legislation around use of data and privacy, et cetera, as you pointed out, which again means having signed-in users is more critical than ever. We have 15 million of them. The revenue that we generate as a result of the data that we have is increasing exponentially. And in actual fact, now over 90% of all of the revenue that we generate that is aligned to our data comes from our own first-party data asset. So we are not reliant on any third-party data products or suppliers to monetize that into the future. As it relates to your third question, which was power ratio. That is a pretty traditional linear television term, I must say. It's not something that I spend that much time thinking about from a monetization point of view into the BVOD world because it sort of hinges your wagon to traditional competitors where our opportunity is to enter into the digital video market where a power ratio will be not relevant.

Your next question comes from Darren Leung from Macquarie.

Congrats again on a good result. I just have 2 questions for me, please. The first one was just in relation to Stan. It's mentioned as content delays in your presentation pack. Can you give us a feel for will these costs sort of be pushed out to later years? My understanding was it was in relation to a specific sport. And then the second question was just in relation to subscriber growth in Stan. So obviously added 100,000-odd in the last 6 months. But just can you throw any color as to how much was Stan Sport versus standard payment. And then also when I think about the guidance here, just given you had obviously a good Stan first half sort of cost reduction as well, it actually is implying that there's not that much Stan subscriber growth in the second half, so just curious for any color you can provide here as well, please.

Okay. So I think that 2 questions turned into 3. What I might do is just -- I think just to clarify our position, I think, in the middle question around the Stan Sport subscriber growth, whether the sport or Stan itself. When we talk about our 2.5 million, or over 2.5 million, we're talking about Stan itself, the Stan Sport proposition is an add-on to that. So sports subscribers aren't double-counted within the 2.5 million. So they are separated. On the other questions, I'll get Martin to talk about. So I think the first one was around the delay of content. I think it was in relation to sports specifically. And then maybe a bit of color about how we think about Stan going forward into the next half.

So the delay of cost, can I just ask, was it in relationship to sport or entertainment? I understood there was entertainment there.

In relation to sport.

To sport. So how we recognize the cost is obviously over the season. And with the season starting for rugby in February, you have got the season in the second half a little bit longer than in the first half. But there's slightly higher cost in the second half, so that's correct. The subscriber growth in the second half, we see a continued subscriber growth in the second half. We just had, last week, rugby coming back for the second season. We have the knockout stages for UEFA. We have started with motorsport. And then we have got our first pay-per-view fight. That is on the sports side. And on the entertainment side, we have got very strong content lineup coming through in the second half as well.

Your next question comes from Lucy Huang from Bank of America.

I just have two. So firstly, also in relation to Stan. Just wondering if you can give us some color as to how many subscribers are using the Stan Sport package currently and any color that you can give us on the churn rate off and on kind of Stan Sport packages, whether that's -- what's the trend been over the last few months and any color on whether Stan Sport is now a profitable proposition given the strong kind of ARPU growth that we've seen. And then just my second question is in relation to TV. So just wondering what are your thoughts on the potential impact on share from the Winter Olympics.

Yes. Look, I might just take the Stan one quickly. So just in relation to Stan Sport subscribers. Obviously, we haven't disclosed a specific number of subscribers for Stan Sport in this update, but suffice to say, we've seen very solid growth in the Stan Sport subscriber numbers since the last update, which we gave at the AGM. And just to reiterate again something which we've said in market in terms of the question around profitability. We look at each sport and the acquisition of that sport independently. And each sport that we acquire has a hurdle that it requires to get over, which is that it must be able to demonstrate its positive contribution on an independent basis within the Stan Sport business. If I shift over to the second question, I might get Steve to pick up on that one.

Yes, it's a short answer. It will have no impact at all on our share. Our share in this quarter, as my -- or revenue profile have said, as Mike mentioned, we're growing by about 10%. For the half, we'll grow our share in a growing market, but the Olympics will have no impact on that.

Your next question comes from Ben Rada Martin from Goldman Sachs.

I've just got two, if that's all right. First one is, I guess, on capital management. It's worth just probably calling out that your net cash -- or nearly net cash, I should say, excluding Domain. Just interested in, I guess, how you're thinking about your potential options from here. I know you flagged continued investment in Stan and Domain, but we haven't really seen too much of an increase in CapEx. So just interested whether there's potential M&A across other assets, in the media or classified space, or if there's a potential for additional returns to shareholders. So that's my first. And then secondly was just on your publishing segment. I think your -- with your full year guidance implying $55 million growth in EBITDA for the full year, and you delivering $26 million in the first half, it just implies a bit of an acceleration to the second half. So I'm just interested to see if you think that's being driven by the underlying publishing business or more so on the platform payment side. Both of those would be very helpful.

Yes. Let me take the first one. We might come back and clarify the second one. I'm not sure everyone sort of picked that one up. But in terms of capital management, look, the strength of our balance sheet and the results that we're seeing for this interim results and the outlook clearly has put us in a position to pay a very healthy dividend for shareholders, up 40% on the same period last year. In terms of going forward, suffice to say, in our commentary, we've made some statements around that. We will continue to look at organic investment opportunities inside our business within Nine and across the group. And of course, we're coming out of a pandemic. I think it is still prudent to be conservative with our balance sheet whilst we also look at the opportunities that may exist in front of us in terms of less organic investment. Maybe the second question related to publishing, we were talking about half-on-half. Can you maybe just clarify what the question was there?

Yes, absolutely. So just looking at your full year guidance upgrade just implies a bit of an acceleration into the second half. So interested if that's a combination of both the platform's payments and your underlying publishing business or one or the other?

Yes. Look, I'll take that one, mate. It's a bit of both, to be quite honest with you, because we're cycling off some of the revenue falling away last year from the [ Metcalf ] deal. So we're picking up on that. And the ongoing subscriber business as well is going to continue. I mean it's not a massive switch between the 2 halves when you look at it. But yes, there will be improvement.

Yes. Yes.

Your next question comes from Entcho Raykovski from Credit Suisse.

I've got three. I might ask them one by one. The first one is on Stan, with the subs obviously continuing to grow, which I would have thought is a pretty good outcome in the current environment. You've spoken about content. But I'm just interested in whether you're seeing competition for subs on the marketing side accelerating domestically. And what does that mean for you in relation to Stan marketing costs and for customer acquisition costs more broadly?

We'll get Martin to talk to Stan.

Sure. So what we've seen is a continuous decline of our customer acquisition costs. So I spoke about our marketing engine. So we've got our active base, but also our inactive base that is over 7 million subscribers, which has a credit card attached, watch history, watch devices, all of that. So we are able to really efficiently acquire customers, either new but also reactivation. So while there's more players in the market, and they're all investing more in marketing, what we've also seen traditionally, the more is invested by the total market, it basically -- it lifts all boats. So it really grows the entire category, and it drives up multiple subscriptions in the market.

And I think it's one of the things that we've spoken as a barrier to entry. It's an area where Stan has a clear differentiation from businesses that are launching from 0. It is a really strong differentiator for our business in terms of the efficiency of that engine.

Yes.

Okay. Great. Second one is on BVOD. Where do you think BVOD can get to longer term in terms of penetration of the digital video market? I know you previously framed this digital video market. I think you mentioned total video today. But I think at the last result, you had 11% BVOD penetration. And the reason why I ask is, notwithstanding your comments today, I think there's still some skepticism in the market as to whether those 30-plus percent growth rates can continue.

Yes. Look, and I think maybe to talk about that broadly, one of the challenges in measuring ourselves against the total digital video advertising market is there isn't an aggregated and consistent measure of the market. So we have to look at a number of different data points in order to compile that position in the market. So look, I think it's really difficult to talk about a specific number. But suffice to say, Steve, in the commentary earlier, spoke about what we're seeing as the volume of advertisers that are advertising on our BVOD platform who aren't television advertisers. So clearly, they are digital video advertising, some 1,300 advertisers, and we're seeing that number grow. So it's quite clear that the BVOD proposition, with its premium content and the way it is being taken up with the change in consumer behavior, is growing and taking a share of that total digital video advertising market, and we'll continue to do so strongly over the long term.

Okay. And the final one is, hopefully, is a straightforward one. How do you think about the risk that you might lose the Australian Open rights when they come up for renewal? There've obviously been some press reports that Seven is interested again. So I guess what I'm trying to ask is how important is tennis for your schedule because it seems like, since you've got it, you've been fairly consistently #1 in revenue share.

Yes. Look, it's quite clear that Nine and Tennis Australia have built a fantastic partnership around the Australian Open. And it's been great for our network, and it's been great for tennis and, in fact, sport, in Australia. I'm very comfortable in saying that relationship has never been stronger. And of course, it extends for a number of years from where we are today. We continue to have the rights under the current agreements into 2023, 2024. So it's a long runway before that becomes a key concern or thought for our business. Suffice to say, when the time is right, we'll have that discussion with Tennis Australia. And like any sport, we'll look at it through a very commercial lens when we go into that discussion.

[Operator Instructions] Your next question comes from Brian Han from Morningstar.

Mike, in publishing, do you think your digital subscription growth is outpacing the market in that particular space? And I just want to follow up on one of the previous questions. The upgrade to your publishing earnings expectations for the year, is it more driven by digital platform licensing deals as opposed to growth in digital subscriptions?

Yes. So there are two questions, one is around our growth versus the market and the other one is what's driving our upgrade. In the first question there, look, the businesses that are operating in the subscription space, in publishing, are very different in nature. We all have a very different approach to how we price. Obviously, within our business, we've got the mastheads in The Herald and The Age, and we have the Australian Financial Review. So I think it's very difficult to be comparing share from a subscriber point of view. Suffice to say, we expect to see continued strength in the growth of our subscription proposition. It performs exceptionally this year. And probably a great segue into the second part of the question of what's driving the upgrade. What we've seen since we last updated the market is stronger than expected subscriber growth driving that as well as a stronger advertising market in our publishing business, both in print and in digital. So you've really got 3 growth engines to that. And in fact, digital platform revenues quite clearly are baked into the number either side of the upgrade. So there's absolutely no impact of digital platforms in the upgrade. It's all business performance.

There are no further questions at this time. I'd now like to hand back to Mr. Sneesby for closing remarks.

Well, thank you very much. And again, apologies for the issue we've had with our webcast provider this morning. I hope everyone was able to tune in appropriately on the audio call. That is a wrap for our results briefing, and thank you for your attendance. And we'll see you again at our full year results in August.