Nine Entertainment (ASX:NEC) share price slumps 7% despite earnings surge

Shares in the Aussie media giant are charging downwards on Wednesday.

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The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has fallen more than 7% at the open after the group's latest full-year results release.

Nine Entertainment share price slumps despite earnings surge

Some of the key takeaways from today's result for the year ended 30 June 2021 (FY21) include:

What happened in FY21 for Nine Entertainment?

Prior to today's move, the Nine Entertainment share price had rocketed 69.3% higher in the last 12 months. It was a big year for the Aussie media group with the launch of Stan Sport and the completion of agreements with major digital platforms like Facebook (NASDAQ: FB) and Alphabet (ASX:GOOGL)'s Google.

Nine reported ad market growth amid a focus on brand exposure from advertisers. The Aussie media group also noted growth in revenue and profitability for its TV Combined segment and strong audience results across all platforms.

Significant revenue growth combined with prudent cost management saw Nine generate a strong pro forma operating cash flow of $346.2 million and reduce net leverage to 0.4 times during the year.

What did management say?

Nine Entertainment CEO Mike Sneesby had the following to say this morning:

After a year which began in the depths of COVID, we are pleased to report 43% growth in EBITDA for FY21. Whilst this growth was consistent across both halves, the drivers in each half were quite different, highlighting the strength of Nine's mix of advertising and subscription-based assets.

While the past year has proven challenging, we have been able to establish the base to execute on our longer term strategy.

We are starting FY22 with strong momentum across all of our businesses — in terms of audiences and revenue, advertising and subscription. With the foundation of Nine's unique assets, strong cash flows and a supportive Board, we have a clear vision for the future as Australia's Media Company.

What's next for Nine and its share price?

Nine's metro free to air (FTA) ad revenue is expected to be up almost 20% in the FY22 year to date compared to the same quarter last year.

The Nine Entertainment share price is one to watch as the media group forecasts FY22 Publishing EBITDA of $30 million to $40 million. In its subscription business, Stan's revenue run rate is more than $340 million with total FY22 costs expected at the lower end of the previous $70 million to $90 million guidance range.

The Nine Entertainment share price has climbed 19% higher in 2021 after accounting for Wednesday morning's slump.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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