Shares of Nine Entertainment Co Holdings Ltd (ASX: NEC) opened the day 2% higher on Friday following the group's $640 million divestment of Nine Live yesterday.
Since listing on the ASX in 2013, NEC's shares have climbed around 14%.
However the sale of Nine Live – a ticketing and touring company – has some analysts concerned about the media giant's medium-term growth prospects.
During the half-year to 31 December 2014, Nine Live accounted for 14% of NEC's earnings before interest, tax and corporate costs.
Some may also be critical of the divestment as being too near-sighted because the NEC board says it will focus on returning 80% to 100% of annual net profits to shareholders in the form of dividends.
Indeed, NEC's key television business could be under structural threat from the proliferation of streaming services like Netflix and Foxtel's Presto. Meanwhile contributions from its digital business represent just 6% of earnings before interest, tax and corporate costs.
Should you buy, hold or sell NEC shares?
It's worth noting NEC is still a strong Australian business and could prove to be a high-yielding dividend stock in the years ahead.
However, personally, I think it is hard to see its shares reliably outperforming the S&P/ASX 200 (ASX: XJO) (Index: ^AXJO) over the medium term. I'd like to see a lower share price before hitting the buy button.
