Motley Fool Australia

ASX stock of the day: Nine (ASX:NEC) share price surges on sporting venture

reality tv, show, shocked, excited, watch

The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price is on form today. Nine shares hit a new 52-week high of $2.42 a share in early trade, before pulling back slightly to $2.38 per share at the time of writing, up 1.50%. The S&P/ASX 200 Index (ASX: XJO) is also up 1.50% today.

The Nine share price has risen nearly 22% over the past month, and 10% over the past week alone. It’s been an interesting year for this diversified media company. Nine shares are up nearly 33% year to date, and up close to 200% since the lows we saw back in March.

Who is Nine?

We would probably all be familiar with Nine’s flagship asset – the Channel 9 television network. But these days, the company is a lot more diversified than just a television network. It owns the 9Now on-demand video platform, a stable of radio stations, including the popular 2GB channel in Sydney, and a stake in property classified company Domain Holdings Australia Ltd (ASX: DHG).

And as of 2018, it also owns the old Fairfax newspapers, including The Sydney Morning Herald, The Age, and the Australian Financial Review. But perhaps the jewel in Nine’s crown is the streaming service Stan.

Yesterday, we reported that Stan had just signed a $100 million deal with Rugby Australia (Rugby Union) for 3 years. The deal will allow Stan (and Nine) the rights for broadcasting both Super Rugby matches as well as the national Wallabies Test matches. The rights were previously held by Foxtel for more than 2 decades.

Alongside this announcement was an interesting view into the company’s plans for the Stan platform, with the launch of ‘Stan Sport’. Nine told investors in an ASX release yesterday that Stan Sport will be a “live and on-demand premium sports package to be offered as a bundle to Stan’s streaming customers from 2021.”

A new sports platform

What it said next was even more indicative:

The launch of Stan Sports will enable Nine to adopt a total television approach to sports as it offers extensive live and on-demand coverage, available to subscribers to Stan Sports, as well as some select premium events on Nine’s FTA television channels. Further to Rugby Union, Nine is progressing opportunities to invest in additional exclusive sports rights, to be distributed on either a pay or cross-platform basis, focusing on driving its long term subscriber growth and profitability objectives

And we seem to know more about these “additional exclusive sports rights” today. The Australian Financial Review (AFR) is reporting that Stan Sports has its eyes set on another lucrative sporting deal. The AFR alleges that Nine/Stan is “expected to lock in broadcast rights for the French Open and Wimbledon tennis tournaments as part of the media company’s new sports strategy.”

The French Open and Wimbledon are 2 of the 4 annual tennis ‘grand slam’ tournaments. The other 2 are the US Open and our own Australian Open.

The AFR goes on to say that “sources with an understanding of Stan Sport’s plans said Nine and Stan were looking to become the home of grand slam tennis.”

According to the AFR, Nine already owns the rights to the Australian Open as well, having acquired them in 2018 from Seven West Media Ltd (ASX: SWM). However, the rights to the US Open reportedly remain under the control of Walt Disney Co (NYSE: DIS)’s  ESPN network for now.

Why is this significant?

Until now, Nine’s Stan platform did not offer any sporting content, instead mirroring its US rival Netflix Inc (NASDAQ: NFLX) in providing mostly television shows and movies, as well as some Australian content. Thus, this week’s announcements mark something of a shift in strategy.

Nine will no doubt be hoping this pays off (and judging by the Nine share price today, investors are betting it will). Stan has been a top performer for the company in recent years. The platform was one of the biggest contributors to the company’s FY2020 earnings report.

Back in August, Nine told the markets that Stan managed to grow revenues by 54% year on year to $242.1 million, up from $157.1 million in FY2019. In the same report, the company reported that the combined contribution from Stan and 9Now, as well as the digital components of Domain and Publishing, grew by 40%. They now make up roughly 48% of the company’s total earnings (EBITDA).

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Sebastian Bowen owns shares of Walt Disney. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short January 2021 $135 calls on Walt Disney. The Motley Fool Australia has recommended Netflix and Walt Disney. 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 Scott Phillips.

Related Articles…