Nine Entertainment Co. Holdings Ltd (ASX: NEC) released its half-yearly results on Tuesday, with the media company reiterating the significance of its stake in Domain Holdings Australia Ltd (ASX: DHG).
The media company's financials were given a timely boost last week when the US real estate company CoStar Group, Inc. (NASDAQ: CSGP) announced its intention to wholly acquire Domain, buying up almost 17% of Domain's shares on the market.
The move saw Domain's share price jump by more than 40% in early trade last Friday.
With its 60% holding in Domain, Nine's financials were given a significant boost on the back of CoStar's takeover bid, with its share price climbing more than 10% since last week.
Domain's recent run has given Nine a welcome talking point to share with investors amid a barrage of less exciting news.
Nine posted a net profit after tax of $112.2 million for H1 FY25, down 25% on the prior corresponding period.
More encouragingly, the media company reported revenue for the same period of just under $1.4 billion, up 1% from H1 FY24.
As such, the 15% growth in Domain's EBITDA contribution to Nine added value beyond the media company's market cap.
It seems Nine is well aware of Domain's potential to keep delivering to the media group.
The company stated: "Domain continues to be a key part of Nine's media ecosystem and long-term growth strategy."
Clearly, as well as the potential to realise synergies with Domain and the wider group, Nine would be a far weaker entity without its real estate platform, particularly when pitted against its key competitor, News Corporation (ASX: NWS).
With a majority holding in REA Group Ltd (ASX: REA), which owns realestate.com, News Corp enjoys a commanding position in Australia's real estate advertising space.
Domain reported revenue of $217.2 million for H1 FY25, up 7.4% from the previous year, while REA Group posted revenues of $873 million over the same period, up 20% from the previous year.
While those figures may suggest the gap is widening between the competitors, another metric tells a different story.
Domain stated it achieved a 7% uplift in site visits versus a 2% uplift for its major competitor when comparing the period from July to December 2024 (H1 FY2025) to January to June 2024 (H2 FY2024).
It appears CoStar founder and CEO Andy Florence, who built the $US30 billion real estate tech company, believes he can replicate his previous successes and further close that gap if his company gains control of Domain.
Will the deal go ahead?
That's the $2.7 billion dollar question.
The Nine and Domain boards will be weighing up CoStar's $4.20 cash per-share offer.
Still, that does seem a bit cheap, particularly with Domain shares currently trading at around $4.40 and remaining a long way off the highs seen in 2021, when they were changing hands for more than $5.80.
So, is it too early to part ways with the golden goose?
It's looking that way.
