Nine Entertainment could save $130m if NRL season is cancelled
Nine Entertainment Co has outlined plans to strip up to $266 million from its cost base this year to cope with the COVID-19 pandemic, with nearly half of the savings contingent on the NRL season being cancelled.
The diversified media company, which owns The Sydney Morning Herald and The Age, said in an update to the stock exchange on Monday it could save $130 million this calendar if the NRL season is scrapped. It could also save money by removing bonuses and commissions to staff, deferring spectrum payments to the government and by altering spending on local content.
Nine's latest initiatives build on the $100 million in savings it is already seeking to extract from its television division, a plan it announced at its half year results in February. Those savings, which included reducing spending on one-off sports events and US programming, will be brought forward where possible.
Chief executive Hugh Marks also previously flagged cost savings in the company's metropolitan publishing division through efficiencies in printing, distribution and output deals like newswire service AAP, which is facing the prospect of closure.
The announcement, posted to the ASX, comes two weeks after Nine withdrew earnings guidance, citing "quarter four uncertainty".
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On the assumption the NRL season is cancelled, $130 million will be saved by the company, while changes to the timing of local content will save almost $30 million. The company will also reduce sales and production costs and remove bonuses and commissions, a decision which will save $68 million. Deferral of spectrum payments will save $10 million this financial year, while deferral of capital expenditure projects will save $30 million.
The savings on content and spectrum will hinge on assistance from the Morrison government. Last week, The Sydney Morning Herald and The Age revealed Communications Minister Paul Fletcher was considering providing temporary relief from spectrum tax fees and forbearance of content quotas, but no formal announcement has been made.
Nine chief executive Hugh Marks said he was confident the business would emerge from COVID-19 as "stronger" and "more competitive" despite expecting a 'material negative impact' on advertising from April.
Group revenues for quarter three remained within guidance, Nine said, while reporting audience and subscriber growth through services Stan and 9Now.
"This is a very difficult time for all Australians, on many levels," Mr Marks said. "Notwithstanding an expected significant impact on on our business as conditions continue to evolve, we are confident that with our enhanced audience position, our mix of assets and the commitment of the Nine team, we will emerge from this period a stronger and more competitive company."
The company cautioned that a prolonged economic impact of the coronavirus outbreak is "likely to result in further initiatives."
Nine shares closed up 11.7 per cent to $1.05.
https://www.smh.com.au/business/com...-nrl-season-is-cancelled-20200330-p54fb3.html
(From last week, but still pertinent...)