Investors were left unsettled as Nine Entertainment Co Holdings Ltd (ASX: NEC) shares plunged 10.46% following the release of its fiscal year 2025 (FY25) results. At the time of writing, the shares are trading at $1.6475 each, marking a significant drop despite being 22.04% higher over the past year.
The sharp decline in share price comes on the heels of a mixed financial report. While revenue saw a modest 2% increase, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 6%. Additionally, the net profit after tax (NPAT) decreased by 10%, and net profit after tax and minorities fell by 12%. Furthermore, the fully diluted earnings per share (EPS) dropped by 10% to 10.5 cents per share compared to the previous fiscal year.
Macquarie’s Cautious Outlook
In response to the results, Macquarie Group Ltd (ASX: MQG) maintained a neutral stance on Nine Entertainment’s stock, albeit with a slight adjustment to its target price, raising it by 1 cent to $1.25. This new target suggests a potential 24.1% downside over the next 12 months for investors.
“Target price = A$1.25/sh, implying 5.5x EV/EBITDA (vs. 4.5x avg excl Domain recently) and 14.5x 12-month forward P/E. This excludes the A$0.49/sh special dividend (A$0.70/sh with franking benefits) with an ex-date of 11 September 2025,” Macquarie stated in its investor note.
The brokerage firm also revised its earnings per share (EPS) forecasts, cutting them by 29%, 35%, and 33% for FY26, FY27, and FY28, respectively. It anticipates flat EBITDA and NPAT, excluding Domain Holdings Australia Ltd (ASX: DHG), in FY26, citing the cyclical benefits of the Olympic Games in 1H26 and ongoing challenging market conditions.
Challenges and Opportunities Ahead
Nine Entertainment’s media broadcast segment faces headwinds from the structural decline in print media and cost growth in the low to mid-single digits. However, Macquarie sees potential growth in the company’s streaming service, Stan, particularly following the acquisition of Optus Sport in August 2025. This acquisition is expected to enhance Stan’s product offering, allowing for higher pricing without significant customer churn.
Macquarie emphasized the importance of advertising spend as a critical factor for FY26, which it plans to monitor closely on a monthly basis. The brokerage also noted that Nine Entertainment has balance sheet optionality for mergers and acquisitions, which could diversify earnings away from its structurally challenged industries, such as broadcasting and publishing.
Historical Context and Market Implications
The media industry has been undergoing significant transformation, with traditional broadcasting and publishing facing intense competition from digital platforms. This shift has led companies like Nine Entertainment to adapt by investing in digital and streaming services. However, the transition has not been without challenges, as evidenced by the company’s recent financial performance.
Historically, media companies have had to navigate the dual pressures of declining traditional revenue streams and the need for substantial investment in digital capabilities. Nine Entertainment’s current predicament reflects these broader industry trends, highlighting the importance of strategic pivots and innovation.
Looking Forward
As Nine Entertainment navigates these turbulent times, its focus will likely remain on expanding its digital footprint and optimizing its content offerings. The company’s ability to leverage its assets, such as Stan, and explore strategic acquisitions will be critical in maintaining competitiveness in a rapidly evolving media landscape.
Investors and analysts will be closely watching Nine Entertainment’s next moves, particularly in light of Macquarie’s cautious outlook. The company’s performance in the coming quarters will provide further insights into its ability to adapt and thrive amidst industry challenges.
