Nine Entertainment share price takes off after 71% profit boost and 'record' dividend

The media company is riding high after buoyant results, but what do ASX investors think about its fortunes?

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Key points

  • Media company Nine Entertainment reported its full-year results
  • Revenue, earnings, profit all up
  • Nine will pay a record dividend as well as buy back up to 10% of its shares

The Nine Entertainment Co Holdings Ltd (ASX: NEC) shares have surged higher in early trade Thursday after the company announced a "record" result and dividend payout, as well as a $341 million buyback.

At the time of writing the stock is up 5.5% to go for $2.11.

What did the company report?

What else happened in FY22?

With Australia's two largest cities in lockdown for much of the first half of the financial year, Nine Entertainment's television business thrived with a captured audience.

That arm was also boosted in December with a new broadcast deal with the NRL worth $650 million for the 2023 to 2027 seasons.

What did management say?

Nine chair Peter Costello said: 

2022 has been a record year for Nine, on many levels. From a profit perspective, we have reported the highest ever group EBITDA as well as total TV and publishing EBITDA and margin. At the same time, our ambition to accelerate profitable growth from our digital businesses is being realised, with more than 50% of EBITDA now attributed to our digital expansion, tracking ahead of the long-term targets we have previously communicated.

For our shareholders, from our FY22 profit, we have also paid or announced a record, fully franked dividend of 14 cents per share.

Chief executive Mike Sneesby said:

Whilst broader economic factors are beginning to impact some areas of the market, Nine's strong competitive position and balance sheet stands us in good stead. We have successfully diversified our earnings base, with more than 30% of our revenue now from subscription and licensing.

What's next?

Nine Entertainment forecasts EBITDA between $380 million and $400 million for the first half of financial year 2023.

Sneesby said:

Across all of our advertising-based businesses, we are confident that we will continue to grow our share, reflecting our content and distribution capabilities, as well as our focused approach to sales and the associated use of our extensive data pool. We expect any market softness will create opportunities for Nine to further strengthen its position as Australia's media company.

Nine Entertainment share price snapshot

Nine shares have lost about one-third of their value since April as fears about the economy repelled investors from advertising-driven businesses.

The stock has recovered somewhat in recent weeks, with a 10.5% gain since mid-June.

The dividend yield, after the 14 cent payout was announced, is now at a juicy 7%.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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