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

Good morning, everyone, and thank you for joining us for our first half 2025 results briefing. I'm Matt Stanton, Acting CEO of Nine Entertainment. Joining me here today is our Acting CFO, Graeme Cassells. 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, present and emerging and extend that respect to all First Nations people today. For myself, I am on the land of the Cammeraygal people of the Eora Nation. At Nine, we remain focused on executing our strategy by bringing together a unique suite of media assets to maximize the scale, diversity and monetization potential of our audiences. Through this latest half, we have continued to build on the foundations of this strategy. We have invested in our premium content slate and successfully delivered major events like the Olympics, Paralympics and the Melbourne Cup, and award-winning cross-platform investigative journalism. These events showcase the breadth and depth of Nine's commitment to ensuring our audiences and consumers have the best possible experience. We have expanded our offering with additional content through FAST channels and incremental publishing and digital audio content. We now have the team in place to ensure our integrated audience platform can optimize the value of our strategically aligned audience verticals. One recent example effectively drove audiences to 9Now for the Australian Open. The CDP identified 316,000 people from the publishing audience who were interested in tennis based on the articles they were reading who had not watched the tennis on 9Now. Targeted advertising of the AO to these people resulted in 57,000 of them logging on to 9Now for the first time to watch the tennis. That was 13% of the 9Now audience increase for the AO this year. We are continuing to progress our use of AI, focusing on optimization of content, product and tech initiatives required for personalization as well as operating efficiencies. Across each of our core revenue streams, we are changing our business model, including the introduction of ads on Stan, evolving our relationships with the key agencies beyond share metrics, engaging across a broad range of digital platforms to ensure we are fully compensated and strengthen our collaboration with Domain. We are very focused on ensuring Nine is appropriately structured and resourced for growth. To this end, Nine recently embarked on a transformation program, Nine 2028. Over the next 3 years, this effort will reset the Nine business to put consumers at the center of what we do; unlock the power of the Nine Group to drive value across all our holdings and simplify the way we work. We will go into a bit more detail on the latter later in the presentation. It encompasses both strategic and cultural transformation and is heavily focused on both cost efficiencies and revenue opportunities as we position ourselves for growth. Let's now look at our results. While there were some headwinds to our reported numbers, including both the absence of Meta revenues and the challenging free-to-air advertising market, we were pleased with the underlying performance of much of Nine's business. Accounting for more than half of the total group's revenues, Nine's digital revenue grew by around 6% across the 6 months. We recorded growth in revenues at 9Now and Stan, Domain and Drive as well as growth in digital subscriptions revenues at Metro Media and streaming revenues at Nine Audio. This growth was underpinned by our digital audiences. Across the 6 months, we recorded growth in audiences across each of our key wholly-owned platforms. At 9Now, we recorded growth in daily active users and live minutes streamed. At Stan, content consumption based on minutes watched grew on both a total and prescriber basis for both Stan Entertainment and Sport. Live streaming and monthly podcast listeners grew at Nine Audio, while for publishing, weekly average articles read per user increased across all major masthead brands. We were very pleased with the outcome of our Olympic coverage during the half. The preparation was intense. It required unprecedented cooperation across the business as well as investment in both technology and platforms. And the outcome was outstanding. In total, revenues generated of more than $160 million resulted in a clearly profitable outcome with the ultimate benefit to Nine being significant more far reaching, providing superior experiences for audiences and advertisers and demonstrating the power of Nine's unrivaled media platform. Subscription and licensing revenue are now more than 30% of totally wholly-owned revenue with 8% growth for the half and growth of both Stan and Publishing, excluding Meta. Contributing to this were price increases at Stan Entertainment and our mastheads as well as strong underlying subscriber trends. While our cost base was higher this half due predominantly to the Olympics and Paralympics, we continue to focus on underlying efficiencies. We removed around $35 million of costs from the business across the half and are now expecting to exceed previous full year guidance of $50 million by $10 million to $20 million in FY '25. At this point, I'd like to ask Graeme Cassells, our Acting Chief Financial Officer, to talk through the group financials.

Thanks, Matt, and good morning, everyone. For the 6 months to the end of December, Nine reported group revenue of $1.4 billion, up marginally in the prior comparable period and group EBITDA of $268 million. Group net profit after tax and minorities and before specific items was $95 million. On a statutory basis and inclusive of our net specific item expense of $16 million, net profit for the year was $96 million. Slide 7 details the composition of specific items, which totaled a pretax cost of $22 million in the half. The key component is restructuring cost of $16 million, which included $15 million of redundancies and $1 million of professional services and consultancy fees, the latter relating to the Nine 2028 project. The loss on modification of debt facilities relates to the refinancing announced in December and is a non-cash accounting adjustment. Our cost performance this half was distorted by the Olympics. Reported costs ex Domain were $67 million higher, which is more than accounted for by Nine's coverage of the games. The waterfall chart on Page 8 illustrates what we have achieved in terms of underlying costs. On this basis, we show underlying costs down by around 2% with unavoidable cost increases like wage inflation and cyber, more than offset by around $35 million of cost initiatives. As Matt mentioned earlier, we have upped our expectations of full year efficiencies, an incremental $10 million to $20 million above the previous $50 million guidance for FY '25. On Page 9, we have reconciled net debt of the wholly-owned group from the starting position at 1 July 2024 of $489 million to the $481 million we've reported for 31st December. For the half, cash flow from operating activities was $209 million, excluding the Domain group, with the breakdown of this shown in detail in Appendix 2. While this was positively impacted in the half by the Olympics with part of the cash cost already paid in FY '24, there was an offsetting payment to Tennis Australia, reflecting both the higher rights fee as well as a one-off upfront payment relating to the new contract. It is also worth noting the cash cost of the restructuring redundancy program announced in FY '24 and further throughout this half, which resulted in a $25 million cash impact. We have announced a fully franked FY '25 interim dividend of $0.035, which together with the FY '24 final dividend of $0.045 equates to an annualized fully franked yield of around 5.5%. On a wholly-owned basis, importantly, our balance sheet remains solid with leverage at the end of December of around 1.4x EBITDA.

Slide 11 is intended to give you some insight as to how we are strategically thinking about our video business going forward. You will have all seen announcement of Amanda Laing's return to Nine as Managing Director of Streaming and Broadcast as we seek to bring Stan, 9Now and Nine closer together operationally. For the latest half, Streaming and Broadcast reported revenues of $860 million, of which nearly 1/3 is subscription revenue. And the business unit has a combined cost base of $725 million for the half, of which more than 70% is content related. Our focus is on leveraging the premium content we create and curate and maximizing its value across Streaming and Broadcasting. Of course, the component businesses will have their own P&L, which we'll continue to report as we have. The recent strategic transformation project has resulted in a number of initiatives. We will look to optimize content spend across Streaming and Broadcast. We believe there are clear efficiencies to be gained through windowing and commissioning and opportunity to further enhance our offering to the content creators and sporting bodies. Our technology teams across our Streaming businesses, Stan and 9Now, will work more closely together, the former with expertise in streaming, the latter bringing strength in advertising. We intend to streamline the news gathering processes nationally, aimed at ultimately improving news editorial workflow. We will look for opportunities to bring production to Nine rather than relying on outside broadcast. We intend to adapt the digital advertising sales model to bring us increased control of our inventory, enabling better pricing outcomes. We are also actively pursuing third-party sales agreements aimed at expanding our inventory in the digital video market.

Looking now at the results for Total TV. Across 2024, Nine recorded real audience growth for Total TV in both total people and 25 to 54s. We recorded growth in Metro Free To Air and BVOD audiences across the 6 months to December. Nine's exposure to premium revenues, particularly through the Olympics, ensured we outperformed the Total TV ad market, which declined by around 5%. Nine recorded Total TV revenue growth of 2% to $613 million with almost 20% of this revenue coming from 9Now. It is worth noting that Nine's Metro broadcast revenue share of 42.1% was an all-time high for any network in the December half. Reported costs reflected Nine's investment in Olympics, which more than offset some not insignificant cost initiatives across the 6 months. Excluding the impact of the Olympics, we estimate H1 Total TV costs were down by around 3%. We were really pleased with Stan's results this half, underpinned by a strong subscriber performance, reflecting Stan's slate of entertainment and sports content. Revenue growth of 7% was due to a combination of higher average subscriber numbers and higher ARPU. Stan's margins expanded across the year. Sports costs were markedly higher, reflecting the Olympics coverage as well as the new UEFA contract. However, partially offsetting this, Stan worked hard across its overall cost base, keeping entertainment costs down on the prior comparable period. With costs up just 6% across the business, Stan reported a record H1 EBITDA result of $29 million, up 16% on last year. Current paying subscribers increased to more than 2.3 million, while ARPU growth of 6% reflected the March '24 basic tier price increase for entertainment subscribers and the October 2024 increase for standard and premium subscribers as well as removal of the entertainment free trial in June 2024. Stan Exclusives, Yellowstone and From led the entertainment performance, while Stan Originals have again been a significant driver, particularly Bump, Critical Incident and Thou Shalt Not Steal. Stan Originals continue to attract critical acclaim with a record 20 nominations at the 2025 AACTA Awards. Stan's premium Olympics offering, including key product features such as 4K Ultra HD and international multi-language channels delivered a positive EBITDA outcome for Stan. Furthermore, Stan Sport reported strong subscriber retention through subsequent Grand Slam Tennis, Rugby and UEFA competitions. Stan has recently announced the introduction of advertising in Stan Sport during calendar 2025, allowing Nine's advertisers to reach audiences across live broadcast, live streaming and on-demand platforms, creating the most powerful video platform in Australia. Turning now to Page 14. In total, Publishing reported revenue of $268 million and a combined EBITDA of $74 million. With the backdrop of the difficult advertising market and the absence of Meta revenues, the modest 4% decline in EBITDA was a testament to the strength of the group's subscriber base as well as the work we have done to realign and refocus the cost base. On Page 15, we take a closer look at our masthead business. We were very pleased with our digital subscriber performance, both in terms of subscriber numbers and ARPU, resulting in digital subscription revenue growth of around 15% and increases in subscriber numbers and price at The Age, The Sydney Morning Herald and The Australian Financial Review, more than offset the decline in print masthead sales. The ability to lift price reflects Nine's ongoing commitment to quality, public interest journalism and remains a further opportunity. Nine's Metro mastheads were, however, impacted by the softness in the broader advertising market. Print advertising declined by 14%, reflecting softness in travel, business and luxury goods, while digital advertising revenue proved more resilient, declining by just 4% across the half. With a growing registered user base and the database opportunities around deeper advertising integrations, Nine is focused on incremental advertising opportunities going forward. Costs at the mastheads declined by $8 million or 5%. While the voluntary redundancy program in late 2024 was very public, Publishing's cost initiatives began in FY '24. Moreover, the mastheads have continued targeted investment in their growth areas focused on ensuring recent audience and subscription strength is maintained, specifically the opening of a new Parramatta bureau this half as well as a focus on growing the AFR's B2B opportunity and enhanced audience capability. Nine's other publishing assets, namely nine.com.au and Pedestrian were impacted by the recent restructurings with lower revenue more than offset by reduced costs. We continue to be positive about the outlook for Drive, which grew its revenue by 6%, underpinned by a marked increase in used car revenue, a key part of Nine's investment in marketplaces. Domain reported a week or so ago and the 14% growth in EBITDA reflected continued strength in the listings market throughout the half, coupled with firm cost controls. With a focus in the half and growing audience, Domain delivered positive metrics, including double-digit growth in unique audience and listing views. The reported 8% growth in digital revenues was underpinned by 12% growth in revenues from Domain's core residential business, which accounted for 74% of total digital revenue. The strong take-up of new products, specifically Platinum Edge and Audience Boost, supported [ Domain's ] revenue growth of 14% to 92% of total residential revenue. Across its other assets, Domain recorded solid performances from its media business. Agent Solutions was modestly higher, whilst the softness in property markets impacted on developers and commercial. Total costs increased by 4% with the timing of expenses impacting on H1.

Irrespective of the announcement of last week regarding the proposal by CoStar, we continue to be committed to working with Domain to ensure maximization of opportunities, both separately and between our 2 businesses. To this end, Domain announced earlier this morning that Peter Tonagh, currently a Non-Executive Director of Nine, would also join the Domain Board effective immediately. The recent executive restructure at Nine for the first time appointed one of our key leaders as Head of Marketplaces, 1 of 3 consumer-focused divisions alongside Publishing and Streaming and Broadcast. Alex Parsons role will be to focus on capitalizing on value creation opportunities between Nine, Domain and Drive. We do a lot already. Nine delivers material audiences to Domain with nine.com.au reaching a record 1 million referrals in November, also providing marketing support primarily through brand integrations has proved successful in the Australian Open. Being part of Nine's integrated audience platform provides Domain with unique opportunities to engage interested consumers with the right content and offers in premium environments. I am confident that the recent appointment of Greg Ellis will ensure this cooperation continues. Domain is of strategic importance to Nine's media ecosystem and our long-term growth strategy. We will consider CoStar proposal with a focus on the best interest of Nine shareholders.

Turning now to audio. This half saw a 50% rebound in radio EBITDA, driven by both revenue share and costs. The 4 city Metro linear radio advertising market grew by circa 1% across the half with continuing growth in digital revenues of 33%, underpinned the 2% total audio revenue growth. Slight share growth reflected the continued strong ratings performance, particularly in Melbourne and Sydney. Radio costs decreased marginally with widespread cost initiatives offsetting the investment in digital and Olympic coverage.

Coming back to Nine's 2028, it's not so much a change but more an acceleration of Nine's strategy. We are reshaping the business in recognition of shifting consumption patterns towards digital video, a changing mix of short- and long-form content and convergence of delivery platforms. The recent announcement of the creation of a Streaming and Broadcast division is the first step. Behind the scenes, we will make better use of data, product investment and AI tools to create even more compelling experiences for our audiences and consumers across the group and create easier pathways between all the touch points in the Nine ecosystem. Using the power of the Nine Group, we will deepen our connection with audiences and advertisers by harnessing our unique data and premium content to drive growth. The program also includes a significant performance improvement element. We are focused on growth opportunities, underpinned by continuing investment in the digital video market, a streaming-first approach, a sharper focus on commercialization and an executive team aligned around group value creation. We are pursuing opportunities to materially reduce our cost base, such as streamlining our news production, rethinking our approach to content and marketing investment and merging our tech stacks across streaming platforms. We expect these efforts will result in additional cost savings of more than $100 million, primarily landing in FY '26 and FY '27, in addition to the $50 million cost-out effort already committed to in FY '25. At the same time, we intend to take this opportunity to transform both the culture at Nine and as leaders in the industry, the underlying cultural issues that have plagued the broader media sector in Australia for many years. That is the role of us as leaders and one which we fully embrace. Following events from early 2024, Nine commissioned the Intersection report, an external review of Nine's workplace culture, which was delivered late October 2024 and released to the market simultaneously. We are committed to implementing all 22 recommendations from the report. In late November, Nine released its formal action plan, the road map to implementation of these recommendations, focusing on 4 areas; people and culture, leadership, policies, procedures and governance and diversity, equity and inclusion. Two-thirds of these recommendations are already complete or underway. The vast majority of our people are proud to work for Nine. They think Nine is well positioned in the media space and feel optimistic about our future. We are incredibly proud of what our people have achieved this year and I'd like to thank each and every one of them for their efforts. As we embark on this journey, we will build on the incredible strengths that have served Nine Group so well for many decades. We will extend our leadership as the recognized creators of experiences that matter most to our audience members and consumers, the news, sport and local entertainment highlights that shape who we are as Australians. Before we turn to trading, I'd like to say a few words about the current regulatory environment. Australian regulated media companies play a vital role in supporting a well-functioning democracy by providing accurate and trusted news, fostering public debate and holding power to account. Our content such as Australian news, live sport and iconic Australian programming brings Australians together. We reflect and preserve the stories, values and diversity of Australian society and contribute to shaping our national identity. Nine welcomes the government's planned reforms, including the announcement that they will establish a news media incentive and introduce a digital competition regime to ensure that the correct regulatory settings are in place for Australian's future. The introduction of the news media incentive is critical to ensure that commercial deals with the digital platforms are entered into or continue to be entered into in respect of our valuable Australian news content. Equally, the digital competition regime is an essential framework, which must be put in place to address the global platform's anti-competitive behavior and the power imbalances correctly and consistently identified by the ACCC and its digital platform reports over the past 7 years. We urge the government to go one step further and also close the gap in the anti-cycling scheme to ensure that large global platforms cannot snap up streaming rights to iconic Australian sport events before broadcasters have the opportunity to acquire those rights for our free BVOD platforms such as 9Now. With an ever-increasing number of Australians choosing to stream live sporting events on 9Now, it shouldn't matter whether you have an aerial on your roof as to whether you can access free live Australian sport or not. We also welcome the government's announcement that it will suspend the commercial broadcast tax, which will save Nine around $14 million during the suspension period. We encourage the government to permanently revoke the tax and ensure that the correct regulatory balance is in place to enable us to continue to create and showcase the content that Australians enjoy, trust and rely on. Okay. I'll now turn to current trading. Calendar 2025 has started well as Nine's premium content continues to attract audiences and advertisers. Across Streaming and Broadcast, audiences have remained strong into 2025, particularly driven by the Australian Open plus 5% Total TV audiences on 2024 and with Stan viewing time up 20% and Married at First Sight, plus 23% Total TV audience with a plus 14% live and 33% catch-up on Nine and Stan Summer Originals, particularly Bump and Black Snow. Nine's Total TV ad revenue in the March quarter is expected to be up in the high single-digit percentage, reflecting the strong audience performance and the benefit of Easter timing. 9Now continues its positive growth trajectory with advertising revenue growth in the low mid-teen percentage expected in the March quarter on PCP. Nine's broadcast advertising revenue from both Metro and regional free-to-air in the current quarter is expected to show mid-high single-digit growth on quarter 3 FY '24. With the market remaining short, it is too early to estimate quarter 4 performance. Over the past 12 months, Nine has focused on realigning its Total TV cost base with increased investment in content and technology more than offset by the other cost reductions. 9Now expects full year reported Total TV costs ex Olympics to be broadly flat, previously marginally higher. While subscriber numbers are expected to consolidate in the second half, Nine expects Stan's second half EBITDA growth percentage to exceed the 16% growth reported in H1. Nine's Publishing business continues to benefit from the growth of digital audiences with Q3 digital subscription revenue growth expected to be in the low mid-teen percentage, underpinning a strong performance from the mastheads. However, the programmatic advertising market remains weak. Second half publishing EBITDA is expected to be below H1 due both to advertising seasonality as well as the cycling of cost efficiencies implemented through FY '24. As Domain commented with its earlier set of results this month, new for sale listings have increased by 3% in January. FY '25 costs are expected to increase in the high single-digit percentages from the FY '24 base of $254 million, at the low end of previous guidance, reflecting ongoing investment in growth opportunities from Domain Marketplace. Domain continues to expect stable EBITDA margins in FY '25 on FY '24. Nine's radio quarter 3 broadcast advertising revenue are expected to decline in the low mid-single-digit percentage, while digital revenue continues to grow strongly. As Nine continues its strategic and cultural transformation, there is expected to be further restructuring into H2 FY '25 and FY '26. These changes will be designed to ensure Nine's optimal position into the future whilst also maximizing the efficiency of our cost base. At this stage, Nine expects further cost efficiencies through to the end of FY '27 of more than $100 million, of which $10 million to $20 million is expected to be realized in FY '25 in addition to the previous guidance of $50 million in FY '25. Nine is similarly focused on revenue opportunities as the group's strategic transformation gathers momentum. Over the next few months, Nine will be progressing plans to accelerate revenue growth from its unique suite of assets through additional content, subscription and advertising opportunities. Before we open the line to questions, I'm sure you are all interested in further details about the CoStar Domain proposal. As you would appreciate, it is very early days with Domain receiving the proposal from CoStar late last week. Domain has told the market that it has commenced an assessment. And in the meantime, Greg and the Domain team remain focused on driving the ongoing momentum in the business. For Nine, as we outlined earlier, Domain is of strategic importance to our business. We are, of course, taking the situation seriously and will give the proposal due and proper consideration, taking into account the best interest of shareholders. However, it is simply too early for us to make any further comment, which I'm sure you will understand. So, now Graeme and I will take your questions. Operator, if you could pass through our first question, please.

Your first question comes from Eric Choi from Barrenjoey.

I hear you on the comment on Domain, but I might take a stab anyway, if that's all right. Just on the first question, everyone is going to ask about the Domain tax base or the value on the books so we can work out a potential CGT. Even if you don't want to comment on that, can we confirm, if I look at the accounts, it looks like you guys have capital losses of $19 million. So, could these be used to offset any CGT? And then just secondly, can you just talk broadly about Domain's strategic value? So obviously, Domain is worth more to NEC than minority shareholders. Are the reasons broadly sort of number one, there's tax leakage. Number two, it looks like you guys are about to accelerate growth. So, your view of the undisturbed share price is probably higher than $3.12. Number three, you guys probably want to control premium. And then number four, you got -- there's probably dissynergies from losing Domain data if you did sell it. So just qualitatively, are we missing any other reasons besides those? And then just lastly, can I pivot to just the advertising outlook in 4Q for TV. So obviously, you guys have no visibility or not much and there's going to be Easter and AO impacts. But if I just look at the industry SMI data, it looks like fourth quarter '24 was further below FY '18 and FY '19 levels than 3Q '24 was. So, the June quarter of last year just looks like an easier comp than the March quarter of last year. Just wanted to confirm that's the case.

Thanks, Eric. There's a lot in those questions. So, we'll try and go from. First off, as I said at the outset, just a few minutes ago, Domain is of strategic importance to Nine and we are giving it proper consideration, as you can imagine. But it is too early to talk about and comment on this, including the tax base as well. So, I can just confirm that. Your point on the $19 million, yes, that is correct. I think that's all we'd like to say at this point in time. And the broader question around the strategic value of Domain to us, we've always thought there's a lot of strategic value in there. But probably the bit you've missed -- not missed, but what I'd say in there as well is as our business becomes more digital in nature and as you can see sort of the BVOD grows, et cetera, as we become more digital, it becomes even more synergistic with Domain, put it that way, because we can push around our platforms and so forth. So, I think there's that consideration as well. But as I said at the outset, if we can leave it at that, that would be -- so I'm not going to take any more questions on that. Going on to the advertising outlook, look, to be honest, we'll have to have a look back at FY '18, '19. I haven't got those on us. The quarter 4 is too short for us to really sort of look at. We've only just opened our books to that. Quarter 3, as we've said, was good. And we'll go through quarter 4 and give you more updates as we go through from there. But it is a bit too early at this point and we've recognized Easter and so forth in there. Okay, next question.

Your next question comes from Entcho Raykovski from E&P.

All right. I mean I do have a CoStar question. Maybe I'll keep it right to the end hopefully. Hopefully, it's not going to be every one you can actually answer. Just firstly, on the ad market, I mean, can you talk in a little bit more detail around the market dynamics, which have driven the turnaround from the first half when obviously, the Metro TV market was down 10% with Olympics coverage contributing, so on an underlying basis, arguably even lower to the growth that you're seeing in 3Q? And as part of that answer, can you perhaps help us quantify the benefit of Easter timing? It's probably going to be tough, but any color you can provide would be useful. I might just hold off for my others.

Yes, sure. Thanks, Entcho. On the ad market side, yes, look, you're absolutely right, H1 was a soft market in there. If you strip out the Olympics, we're sort of market was quite down. But if we look at quarter 3, I think it started very well, as we said. I think we have got to -- the market is good. The sentiment is better in the market, there's no doubt. And I think there's a realization I'm expecting as well of how strong our audiences are and that's across the TV networks. The audiences have been strong for some time and we see that going through and where we're at. I'd say that we've had the tennis and the MAFS specifically in this quarter, which have been driving quite a bit of the growth as well. And I'd say we have learned actually quite a bit from how the teams have done a great job of selling, especially into the tennis and especially on the back of the Olympics, the way we sell premium assets like some of the sporting codes is really strong. And I think we're getting better at that as well. I think we learned quite a bit through the Olympics from a premium side of how to sell through also into the programmatic and the late market coming through. And I think we're getting a lot better at that. I think we've done a good job, a very good job on the tennis this year. So, I think there's an underlying sentiment seems a bit better. I think we've got a bit more -- we got stronger in that and improved our selling of some of the big sporting codes and some of the big assets such as MAFS as well. So I think that's helping. Easter coming in, if you remember, I think Easter straddled sort of March, April last year. This year, it's in April, and you do lose a bit into April. And we also got Anzac Day. So, you've got a bit of stuff going on there. But it is -- there will be a few million dollars impact from between quarter -- well, between April and March clicking in. So, you do have to take that into account between the 2 quarters. I think that was it, Entcho. And you can hold -- if the question is on CoStar, I won't be taking any more questions on CoStar.

All right. Okay. Maybe I'll ask a couple of others. That's useful color. And sorry, I'm trying to reconcile the growth in TV in Q3 with your comments around publishing and radio because those ad markets seem softer. I mean, is that fair? Am I reading too much into it? You've obviously pointed to programmatic advertising remaining weak, radio expected to decline in 3Q. So, is there a bit of shifting of spend between mediums, do you think? Or do you think there's other factors driving that performance? And then my last question, Stan question. How do you think about the ad revenue potential for the business? I mean, very broadly, could we -- if we're thinking about it, could it get to 10% of the revenue base over time, higher, lower? Any sort of broad steer could be useful.

Sure, sure. First of all, on the publishing and audio side of this, there are swings that happen a little bit through -- from our platforms and so forth. So, I don't think there's anything that we're too concerned around on the publishing and audio side. I think there's just swings and timing and events and so forth. So, I don't think there's anything untoward there. On the question on Stan, yes, look, we've announced Stan Sport -- ads in Stan Sport. And we're obviously looking at the Stan Entertainment situation as well and tiers and so forth. We constantly review that and the team looks at that. Look, I think there's a -- we really believe as a broader point, there's a real opportunity in the broader digital video market. And that is broader outside the TV bit. We compete across with the major overseas big tech players in this. It is a big market. I think the thing is that people have thought about us as a market here. We feel like we are -- and we are targeting competing in a lot bigger market than before. And our assets are so trusted as in the other guys as well, so trusted in this marketplace. We do feel there's really, really good upside for the digital video market for the local assets.

Your next question comes from Tom Beadle from Jarden.

Just I might follow up just on Entcho's question just on the ad market. I'm just interested to hear your feedback just at the advertiser level. Are there any particular advertiser categories or industries which you could call out, which are driving the growth in the third quarter? And just with an election in Q4, what is your view on how it might impact this time around? For example, do you think you've become a bit more sophisticated at selling BVOD inventory, which might actually be an important driver this time around? And then secondly, just on costs, can you please provide more color on those $100 million of efficiencies? Just firstly, is that a gross or net number? And are there any areas where you are investing in, which might offset some of this? And just to clarify, I'm also assuming that excludes the Olympic costs.

Yes, sure. Thanks. Okay. I'll try and get through these in that order. So, you might have to come back if I get them all wrong. But first of all, on the ad market, on the government side, you're talking about what's happening. Yes, look, on the ad market color, from an election point of view, we're a little bit unclear whether -- how this is going to work because we do get government money through a lot at the moment. The quarter 3, we've had quite a bit of government money in quarter 3 itself, which has helped. Clive Palmer has also spent quite a bit in this quarter as well. So that has helped us. How that goes into the next quarter, we're interested to see how that works. At the moment, we sort of feel it's a bit neutral into quarter 4, but we'll wait and see. As for how we sell, it's a good question. Yes, with BVOD, obviously, you can be more targeted from that point of view geographically, especially around when targeting the government. So, we do have sort of the data around sort of hotspots we can work through and where we can target for -- in a lot more granular way than we could in the past. So that will help us. There's no doubt. If we talk about -- move on now to the cost side of the question that you asked about the in excess of $100 million in the areas that Graeme talked about and I talked about there around it. First of all, yes, confirm that, that doesn't include sorry, the Olympics is outside of that completely. So, ignore that. That's just a one-off cost that goes up, netted of some displace costs. But -- so the $100 million is the number. And when you say net gross, there always is an element of cost coming out, but then investment that goes in. So, we will -- the $100 million is, I suppose, is the number gross from that point of view. There will be considered investment elsewhere, whether it be in Stan or 9Now content streaming, AI, et cetera. There will be some of that as well and we'll take that into account as we go through our budgeting process. So hopefully, that's answered those questions.

Yes, I probably wasn't completely clear as well with the first question. I just was interested to hear as well outside of government, are there any advertising categories, for example, automotive that are worth calling out?

Yes. There's a bit of automotive, sorry, and insurance. Yes, insurance -- sorry, Graeme just reminded me that there's a bit of insurance and retail as well coming through. And we can get some more detail for you on that as well. I'll ask Nola to pass on.

Your next question comes from Kane Hannan from Goldman.

I had a few as well. I mean, I suppose, firstly, just on the cost program. I mean, Matt, you've been in the seat 4 or 5 months now. It's moving pretty quickly from a cost perspective. I mean this is a big number we're talking to. Just curious, are there any major decisions, sort of strategic pivots you made that's unlocked this cost? I mean I assume it's wrapped up in the Nine 2028 strategy. And then just in terms of line of sight of those savings, I mean, do we have a spreadsheet that sort of goes cost item by cost item to get to that number? Or is it more a benchmarking exercise where you think Nine should be by that time to get those savings?

Yes. Yes. So look, when we go through this, yes, we have tried to move quickly on this. Obviously, we took -- we announced back in FY '24, we're taking $50 million. We took $50 million out there. This year, we announced $50 million, it will be more like $60 million to $70 million because of some of this pull forward of this $100 million that we're trying to do to. The cost program is both pretty strategic in what it does, but also it is granular as well. So, we have got a spreadsheet line by line where we go through and work through every area of the business what we look at. But there's some strategic nature to it as well moves through that. And that allows us to set us up for growth in the future, especially around the digital video market and our platforms that we've got. So, the big 3 or 4 things we talked about, especially in the better use of content commissioning across our platform. So, the whole point of the operating model change to bring Streaming and Broadcast together is very considered in the fact that it will look at how do we use our content across those in effect, 3 platforms at the moment in free-to-air, BVOD 9Now and through Stan. So, we'll look at how we do content commissioning and windowing, et cetera, and we think that there's a lot more value as we put through there from that point. So that unlocks that. Our marketing engine, obviously, we've got a big marketing engine. We spend money marketing, but also, obviously, we are a media company. We can utilize our assets a lot better than we have done. So that is a strategic move to move that together to allow for the whole group driving of marketing of our assets through that. So, we're very excited about that through that. And the other couple of areas is we're looking at across the business, the news editorial workflow processes as we go through and there's some opportunities there through there. You've probably seen some announcements just recently in areas like Darwin and the Gold Coast as well. And that's the start of looking through that. And there's some opportunities to reengineer and make us more effective through that. And probably the other big chunk as well is our tech side of the business in the streaming side around bringing the tech stacks from both 9Now and Stan closer together and the teams working closer together as opportunities. We then go through a number of those other -- another typical areas in the business to look. So, it is a pretty considered process we go through and have been going through. And it's part of the whole transformation we've been doing both from a leadership point of view around culture, but also from a business point of view. So yes, this is -- there's been a lot of work from the team. I've been really pleased with how they responded to it over the last couple of months as we developed this plan. And so yes, it's not sort of a benchmarking exercise and we plucked the number out at all.

Just one follow-up, one. Just as you've done the 2028 strategy and you've gone through the verticals and then segmented the assets, just interested if you talk about how you think if you've got the sufficient scale across those verticals, there's also been press around Foxtel, Optus Sports, all your sort of jumps out to one side on that streaming and broadcast vertical. Just how you think about the portfolio of assets you have today?

Yes. Yes, thanks. Look, I think as well as the $100 million in excess we talked about, the -- we are looking at the program as well and a lot of growth initiatives, and we have got a clear sight of a lot of opportunities for us, whether it's content and the commercialization of it. The digital video market is a very clear one. The fact that we've entered into there as Stan and we'll start that process. We're working with some of the other players in the marketplace in a very collaborative way as well, 7 and 10 around opportunities for us to scale in this marketplace as we go to market. So for us, I think the digital video market is something we do want to scale up in. It's something on our agenda to do. That's one of the key ones. The assets we have at the moment, we've got is we're very happy with the assets. They're all part of the ecosystem at Nine. We're always reviewing them and making sure are we progressing them as much as possible. So -- but we will look at different content assets. There's obviously sport assets that come up now again as well, as you just mentioned one. We will consider those and look for scale in those strategic areas that we are trying to progress here.

Your next question comes from Brian Han from Morningstar.

Matt, the additional cost out that you announced today, can I just confirm that, that's all on the OpEx side? And if so, will there be any step change on the CapEx side going forward?

Thanks, Brian. Yes, the $100 million is OpEx. And -- but there is some CapEx opportunities as well, probably more in the one area in the tech side that I just mentioned as well. So, there's some -- a bit of CapEx. But I think that's one where I'd be a bit cautious because that's probably an area where we do invest from a CapEx point of view in more tech data enablement from there as well.

Okay. And my second question is, with the new operating model, I see a lot of cost out and efficiency drives, which is all good stuff. But I'm just a little confused about the whole platform-led to consumer-led language. So, can you please explain in simple language what that all means as in how does that lead to more revenue?

Yes, sure. Thanks. And when we talk about consumer, we talk about consumer driving consumers and making sure they have the first-class experience they expect. So that would be under the content we do or under the product and tech we do. So, personalization being a key point of that. So, how do you make sure that the consumer has a first-right experience when it comes to Nine and its different platforms and how does it receive that, whether it be audio written, whether it be video, et cetera, making sure that they get the right content at the right time, the right place. That's what we mean by consumer and supporting and helping the consumer. So, we have a very consumer-first angle on things. How -- if we talk about -- if you think like classic about watching a sport match, you watch a sport match, you want to watch it live with 80 minutes in there or you might want to do a mini match, et cetera, as catch-up, making sure the consumer has choices of what he wants to do, whether we look at the Olympics and what we did on the platform of the video platforms through into publishing and making sure it's all seamless and it works together. So, making sure we really have the consumer in mind as we take the choices. And as we have the consumer in mind and work with them as well, that leads to better advertising results as well, so making sure we can commercialize that. So in the past, we've been a bit siloed through there in some of the platforms we've done, but making sure we cross-link and work across and drive the consumers across our platform so we can monetize them a bit better across advertising and subscriptions or even into marketplaces.

That's really helpful, Matt. And my last question is, does Domain play a big role in that whole profit improvement program you announced today?

Look, the $100 million there we talked about is not in the $100 million cost-out OpEx at all. And as I mentioned before, I'm not going to talk any further than that on Domain. Next question. Anymore questions?

Your next question comes from Evan Karatzas from UBS.

Just want to understand or confirm the terminology. So, for FY '25, that you're now expecting cost out in-period benefits of $60 million to $70 million. And if that's right, maybe can you just speak to what you're thinking that the exit run rate will be even if it's rough just for the incremental benefits we should expect into FY '26 as well? Just conscious there will be likely more in line with that $100 million FY '27 target. But just trying to get an idea of that run rate -- exit run rate.

Graeme, do you want to pick that up?

Yes. So yes, you're right. It will be -- $50 million up to another $10 million to $20 million out this year. Of the included that would then take up to '26. We'd expect half of the $100 million to be out. At this time, you'll appreciate we're still going through detailed budget, so it might change marginally. And then the latter -- the last part of the other $50 million will come out in '27. That's what we're expecting just now.

Okay. That's good. Okay. I'm just trying to -- so with the additional cost outs you've taken and this upswing or, I guess, recovery in ad spend market maybe coming, I guess, a bit earlier than expected from a few months ago. Can you just talk about or just speak to there's any impact to your ability to benefit from this upswing if there's any additional costs that need to be, I guess, added ahead of what looks like a decent market type recovery ahead of us?

Thanks. I think I just -- it was a bit unclear, but I think what you're asking was, is there any upside -- is there any cost increase in the increased revenue coming through? Look, there's the COGS that you get coming through and commissions and so forth. But relatively small, pretty much a lot of the increase will drop through to the bottom line. There are, depending whether it comes through in BVOD or free-to-air, different cost size that, but it should drop through pretty much in the same way when we saw last half, our numbers were down, pretty much a lot of the revenue side of it dropped down as well there. So, there's some small bits for COGS and commissions and so forth, but most of it does drop through. Thank you. The next question, please. Is there any...

Your final question comes from Fraser McLeish from MST Marquee.

Just one on the audience sort of trends. There's obviously been a big shift. I mean, more across the industry in the last 18 months with audiences, which had been declining kind of high single digits, looking like you're actually getting some growth now. I'm sure you've kind of had a look at this internally, but -- with your teams, but what's the view on what's driving that? And is it something you think is sustainable? And also, is that sort of getting through with advertisers? Is that message getting through to them that these audience trends have changed?

Thanks, Fraser. Okay. So on the audience growth, yes, look, we've been seeing audience growth for some time coming through as the other networks as well. I'd say -- why are people coming to Nine and to 7 and 10 as well through there is really around -- I'll put it down to quality content. When we've had the real premium quality content, we really are seeing audiences come through. If you look at the AO, for example, what happened there and MAFS is incredible at the moment, what we're seeing there on a BVOD scale, 9Now is doing over 1 million coming through that as well as the 1.5 million. So, you've got 2.5 million watching this on a regular basis. Huge numbers. I think -- and it's not just on Nine. I know 7 and 10 are getting a good bounce and got some quality content there as well, which is working for us. So, I think there is a sort of understanding of the quality of the content is good and strong. So, I think that's probably the biggest element of why the audiences are up with that. There probably is a little bit of a tightening of purse strings a little bit from the consumer and maybe -- so this is -- the free market is an area to go to. So, I do think that is happening. We are actually getting, which has been really encouraging, the youth audience coming back into TV. The Olympics is 25% of people watching the Olympics under 25 years of age. For example, if I look at what's happening on MAFS now the 16 to 39, I know is the proportion, the biggest area as well. So, you are seeing the demographics going -- shifting in the right direction for us, quality content coming through. And I think that's what's driving it. On the second question around the advertisers, I definitely don't think they've come in enough yet and recognize this enough for us. And I would expect that they should be piling into our platforms because it's trusted, it's great content. There's great brands out there. And the CMOs and CEOs trying to drive and invest their own businesses, coming into Nine, 9Now or the other networks is a way to drive your own business. So I think there's pressure there as well. So we'd like to see the advertisers, as you can imagine, coming back more and more to us. Thank you. Is there any other -- I think that was the last question.

There are no further phone questions.

Okay. So well, thank you all. That wraps up this results briefing and thank you for your attendance and we will see you again at our full year results briefing in August. Thanks very much.