The share price of Nine Entertainment Holdings Co Ltd (ASX: NEC) hit a 52-week high of $1.46 today, after recovering from a low of 85 cents set in October 2016.
The free-to-air (FTA) commercial broadcaster has seen its share price rise thanks to several factors. The federal government is expected to substantially lower the annual licence fees the broadcaster must pay, and will also allow companies and individuals to own media companies with exposure to more than one or two sectors.
Broadcasters will also be allowed to reach more than 75% of the Australian population, which could see the Metro TV networks take over or merge with the regional broadcasters, which include Prime Media Group Limited (ASX: PRT), Southern Cross Media Group Ltd (ASX: SXL) and Bruce Gordon’s WIN Television.
The collapse into administration by Ten Network Holdings Limited (ASX: TEN) has also gifted Nine and rival Seven West Media Ltd (ASX: SWM) benefits. We could see the beleaguered network disappear leaving just Nine and Seven to divide up the broadcasting pie.
Of course, investors should remember that the FTA sector faces structural decline as newspapers did before them, with the arrival of subscription video on demand (SVOD) services Netflix and Stan. Stan is half-owned by Nine in a joint venture with Fairfax Media Limited (ASX: FXJ).
Personally, I’d be avoiding the whole sector given the challenges it faces.
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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.