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Good morning, everyone, and thank you for joining us for our First Half FY '23 Results Briefing. I am Mike Sneesby, CEO of Nine Entertainment, and joining me here today is our CFO, Maria Phillips.I'd like to start off by acknowledging the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past, present and emerging, and extend that respect to all First Nations people today. For myself, I'm on the land of the Cammeraygal people of the Eora Nation.We are very pleased with how Nine finished calendar 2022. All of our businesses have made significant progress and improved their competitive position. I would like to thank and congratulate the team for their achievement in delivering these exceptional results, both audience and revenue, notwithstanding more difficult economic backdrop, which has resulted in tighter cost controls in our business. Nine's strategic focus on the content our key audiences most want has paid off across all of our platforms in terms of both audiences and revenue. We have also continued to build our proprietary or own content across all of our platforms, particularly television and Stan with original and co-owned formats giving us greater control over our programming strategy, costs and scheduling. This leading content performance has resulted in clear revenue share growth across all of our advertising mediums. It has also underpinned around 9% growth in subscription and licensing revenues at Nine's wholly owned businesses, Stan and Publishing, as Nine continues to successfully diversify its revenue base.Our Total Television audience strategy focuses on the key demographics that advertisers buy across all of our platforms, and that strategy is delivering. In the 6 months of December, Nine led the market in Total TV revenue with a 40.6% share of Metro plus BVOD, equating to growth of almost 4 percentage points on the previous December half. Nine's content also clearly led the market on a national basis with a 40% revenue share across Nine's Metro and regional stations plus BVOD and incorporating the strong performance from our affiliates, primarily WIN. This performance reflects the strength of our content. In free-to-air, for calendar 2022, Nine Network drew further ahead, once again dominating all key demographics.We've had a great start to 2023. After the amazing leading of The Australian Open, Married at First Sight has returned with a vengeance. ACA is increasing Total TV audience year-on-year, led by a new host, Ally Langdon, and early audience results from the new Today lineup combining Sarah Abo and Karl Stefanovic have been very positive, while the performance of 60 Minutes has helped to reinforce our commitment to news as a key genre for Total Television. We have also had great success in the 9:00 p.m. slot after Married with Big Miracles, The 100 and Under Investigation or homegrown and original content, keeping audiences engage with Nine.Our free streaming business, 9Now grew live streams by 13% across the half and live minutes by 24%. In terms of minutes consumed, we are now seeing live minutes consumed greater than video on demand, a clear inflection point, which confirms our decision to prioritize live programming as a key driver for 9Now looking forward. 9Now has markedly outpaced the BVOD market in terms of ad revenue growth, giving us great confidence that we are continuing to grow our share of the digital video market. Whilst our ratings and revenue performance in Radio has continued to be strong across all of our live and local stations, revenue contribution from digital streaming has now become material, and it's the fastest-growing revenue segment for our Radio business. Total Audio is the future of Radio, through Nine's single sign-on, our incremental content, Nine's growing data proposition and our cross-platform sales initiatives, live streaming provides further growth opportunities for Radio.In Publishing, we are proud of the crucial role our newsrooms play, breaking important stories and producing public interest journalism that is increasingly amplified across Nine's platforms. These strong audiences have underpinned growth in digital subs revenue and total advertising. In addition, with the registered audience base now passing 1.1 million people, we were able to collect behavioral data from more readers across Australia every day. This position of strength enables us to continue to make long-term investment decisions to support our content and product goals in a changing news environment.Stan's expansion of its original slate is delivering significant benefits for the business, driving record audience results and further differentiating the Stan offering. Moreover, original productions create the opportunity to Stan to better control its content strategy and, at the same time, build a long-term library asset. Original productions have underpinned a great summer for Stan. Releases included Black Snow, Poker Face, the series, and the third season of Bump, as well as new seasons of licensed series, Yellowstone and Your Honor. Stan's growing slate of co-commissions with Nine across drama, reality and docuseries with Bali 2002, Love Triangle and Revealed are a reflection of the unique differentiation that Stan is able to leverage by being part of the Nine group. Notwithstanding a competitive market, active subscribers are now approaching 2.6 million. Stan's strategic positioning in Originals and Sport alongside the best of global license content, coupled with its growing subscriber base and strong P&L, Stan is in good stead as the industry continues to evolve and international streamers rationalized their approach.Over the past 6 months, we've locked in significant key content agreements across our television platforms, extending our agreement with Tennis Australia through to 2029 and bringing the Olympics back to Nine through until Brisbane 2032, adding to our long-term agreement with the NRL. Sport remains central to Nine's strategy, augmenting our leading news and local content schedule and it is key to the future success of our business.In August 2022, we announced the commencement of an on-market buyback. And during the half, we bought back around 33 million Nine shares at an average price of just over $2 per share. We also continued to invest in enhancing our competitive position in Stan, particularly through Stan Originals, 9Now as we continue to focus on delivering Australia's best user experience and advertiser experience and in Radio and Publishing businesses. With this result, we've announced a fully franked FY '23 interim dividend of $0.06 as we continue to focus on maximizing shareholder returns. This level of dividend equating to an annualized fully franked yield of almost 6% is testament to the ongoing confidence we have in our business and its future. Our balance sheet remains strong with wholly owned leverage at December 31 of around 0.5x.Turning now to this result. Today, we have reported group EBITDA of $370 million, in line with the guidance we gave at the end of last year. Our competitive position has further enhanced across all of our businesses. And as a group in total, as our content, operations and sales outperformed the broader media market.On Page 4, you'll see the performance of the various parts of our business and the obvious benefits of our portfolio of assets. Remembering that for context, half 1 FY '22 was a record half, not just for Nine, but also for our Publishing business, Total TV and Stan. There is a clear benefit to all of our businesses being part of Nine as a group, both in terms of content and in terms of monetization. Coupled with increasingly diverse revenue drivers, this will help us to continue to deliver strong results through the cycle.The chart on Page 5 highlights Nine's progress as our business further expands through digital distribution. Total digital revenue across Nine increased by around 8% to almost $600 million for the half and now accounts for 44% of total group revenue. Total digital EBITDA declined slightly due to the impact of the softer housing market on Domain. However, we continue to see growth in digital EBITDA for our wholly owned businesses.At this point, I'd like to ask Maria to talk through the group financials.
Thanks, Mike, and good morning, everyone. Nine reported group revenue of $1.4 billion, up 5% on the prior comparable period and group EBITDA of $370 million, which was in line with guidance given before Christmas. The increase in costs in the half of $82 million ex Domain was primarily confined to Total Television and Stan as Nine continues to successfully invest in its market-leading content. Mike will give further color to costs later on in this presentation.Group net profit after tax and minorities and before specific items was $183 million. On a statutory basis and inclusive of a specific item cost of less than $1 million, net profit for the half was $190 million. The Board has approved the payment of a fully franked interim dividend of $0.06 with this result. For the half, this equates to 56% of net profit after tax and before specific items.Slide 8 details the composition of specific items. There were no individually significant or material items and together, totaled a cost of less than $1 million pretax.On Page 9, we look at operating cash flows, focusing on the wholly owned business, so it ties into wholly owned net debt. For the half, operating cash flow was $204 million, excluding the Domain Group. There was an increase in working capital compared to PCP of $84 million, which largely reflects an increase in receivables that occurred as a result of the implementation of our new finance system late in calendar 2022. This resulted in the temporary delay of issuing invoices of approximately $50 million. These timing delays are now fully resolved. Whilst first half cash conversion was lower than normal at 63%, we expect the full year ratio to be around 90%.On Page 10, we have reconciled net debt of the wholly owned group from the starting position at the 1st of July of $173 million to the $291 million we've reported for December 31. Beyond the operating cash flow movements from wholly owned businesses as detailed on the previous slide, Nine distributed dividends of $119 million to shareholders, capital expenditure was $30 million and tax was paid of $93 million. Cash tax paid was around $31 million higher than half 1 FY '22 due primarily to higher installments, reflecting on FY '22's higher profitability. During the half, Nine also invested $67 million in our on-market buyback. We bought back and canceled 33 million shares. The on-market buyback will continue in the second half. The increase in finance cost payments of $6 million reflects an increase in the level of base interest rates and an increase in net debt driven by the on-market buyback. On a wholly owned basis, importantly, our balance sheet remains strong with leverage at the end of December of around 0.5x EBITDA, providing operational and strategic flexibility.I'll now hand back to Mike to add some further color on the divisional results.
Thanks, Maria. Starting with our Broadcast division, comprising our Total Television business and Nine Radio, which contributed around 54% of group revenue and 61% of EBITDA. Focusing first on Total Television, across the half, Nine recorded Total TV revenue growth of 5% to $662 million, of which almost 15% was digital revenue. Both Nine Network and 9Now recorded revenue growth with clear share increases for both. This revenue and share result reflected the clarity of Nine's programming strategy and strength of performance across the half. In calendar 2022, Nine once again won the year in all key demographics on both the network and primary channel basis as illustrated in Appendix 2. In this latest December half, in our targeted 25 to 54 demographics, Nine's primary channel led our nearest competitor in prime time by more than 4 percentage points.As I mentioned earlier, we've had a great start to 2023. From the Aussie Open, through Mass and our core news programming, Nine has continued to produce the content audiences most love. In particular, Married at First Sight in Season 10 has returned with Total Television audiences averaging 1.8 million, clear growth on last year and ahead of the total of the 2 other commercial networks combined. This programming performance and that of our sales team has underpinned growth in revenue share across metro, regional and BVOD. Combined, this equated to 5% Total Television revenue growth. During the half, Nine has continued to invest in its market-leading schedule with a longer-than-normal season of The Block, the T20 World Cup Cricket, as well as drama After the Verdict and dating series, My Mum Your Dad. This investment helped to strengthen Nine's prime time and main channel schedule, particularly focusing on the younger demographics and their propensity to consume via 9Now. Also extending Nine's content focus further into December, while My Mum Your Dad allowed 9Now to be the primary home of Love Island, while also ensuring Nine's free-to-air audiences remain strong. All of these initiatives paid off with significant growth in Total Television revenue share, reflecting the payback from the investments. We also believe there is a real opportunity for Nine at this time to structurally shift the market share paradigm, and we are seeing real evidence that this is the case.In total, TV costs for the half were up 12%. We are continuing to expect half 2 Total TV cost growth to be markedly lower with a full year increase, slightly better than the 7% guidance we gave in August last year. In the Metro free-to-air market of $1.4 billion, Nine's free-to-air revenues for the half grew by around 3%, notwithstanding a market, which was down by 6.4%. Once again, we led the market with a 39.6% share in the December half, up 3.6 percentage points year-on-year. Regional markets overall performed better in the half, down just 1.7%. The benefits of the WIN affiliation, coupled with the integration of our sales teams, led to further share gains in regional markets, up 2.8 percentage points and underpinning 6% growth in revenue from Nine's owned and affiliated regional stations.Turning to Slide 15. 9Now recorded revenue growth of 19% for the half, clearly outpacing its traditional competitors. The BVOD market grew by just 5% for the period, consistent with our view that Nine is expanding its position in the broader digital video market. 9Now strong growth in all key metrics, particularly live, underpin the revenue performance. Growth of 17% in live daily users, 24% growth in minutes streamed reflects Nine's market-leading content, as well as the significant investment in technology we've made over the past 6 months, focusing on improving both the consumer and the advertiser experience. 9Now audiences for prime time programming are now reaching critical scale and have become a significant component of our Total Television audiences. Nine's dating juggernaut, Married at First Sight, returned for its 10th season a few weeks ago, and to date, more than 30% of national audiences have been viewing through 9Now, with actual 9Now numbers growing more than 20%. 9Now's Total People audience for Mass has averaged almost 600,000 across the season to date. All of these data points substantiate our view that 9Now is key to the future of Total Television at Nine and that live streaming will be the primary driver of 9Now looking forward, impacting our strategic decisions surrounding content and sales.Targeted content like Love Island, Mass and My Mum Your Dad are great examples of this, while their commitment to Nine's proprietary sales platform 9Galaxy and also to the work required to launch VOZ reflect our key sales initiatives. Total Television is the future.Turning now to Radio. Nine's Radio ads revenue grew by 7%, ahead of the 5% growth in the market. Overall, Radio audiences grew by 7% across the half with almost 1/4 of those audiences listening via connected device. Revenue share growth was driven primarily by agency revenues with growth in Tier 1 agency in all cap cities. We've invested through 2022 in the extension of our Radio business to digital through the introduction of Nine's single sign-on and the investment in tech to enable targeted advertising, as well as some incremental targeted content. In this result, we've called out digital revenues at just over $2 million, up more than 120% on last year and led by significant growth in advertising revenues from live streaming.Over the past 12 months, strategic decisions to extend Stan's commitments to Originals and to broaden further into Sport have helped to underpin a positive period for the group. Stan's revenue growth of 12% for the half reflects the strong content performance, underpinned by growing subscriber numbers now approaching 2.6 million and strong ARPU growth. Stan's Originals proved to be the key subscriber driver in the half and are expected to be instrumental in the long-term success of Stan. To date, the top 5 Stan Originals have achieved greater unique viewership than the top 5 shows from any first-run output deal, which is a great testament to both the strategy and the implementation.During the half, Bali 2002 and Last Light were both popular as were feature films, Poker Face and Christmas Ransom, and our new reality format, Love Triangle over summer, the performance of Stan Originals has been particularly strong with the latest season of Bump, Black Snow and Poker Face, the series, all ranking in the top 10 shows across the last 12 months, while Transfusion, Poker Face and Gold made up the top 3 films.Stan Sport continued to extend its consumer proposition, securing the rights to the Rugby World Cup and successfully broadcasting the women's tournament, as well as the UCI World Championship cycling events in Wollongong. These sports complement Stan's already strong lineup, including domestic and international rugby, UEFA Champions League, Grand Slam tennis, including the recent AO renewal and an emerging motorsport and fight sports proposition. Once again, the strong performance of Stan's content has given us the opportunity to review subscription pricing. Excluding Sport, Stan's costs were up by around 14% as the group continued to invest in broadening and deepening its premium content slate. Overall, Stan reported EBITDA of $18 million, and we continue to expect growth in revenue and EBITDA for the full year over FY '22.Turning now to Page 18. For the half, our combined Publishing business derived more than 60% of its revenue from digital sources and almost 38% from subscriptions and licensing, both key to the long-term future of the business. In what was a fairly quiet news cycle and with the backdrop of more challenging economic conditions, the performance of Nine Publishing was strong. In total, Publishing reported revenue of $300 million and combined EBITDA of $96 million, marginally up on half 1 FY '22. Digital subscription and licensing revenue grew by 5% to $89 million across the half, driven by solid subscriber performances across each of The Herald, The Age and The AFR. While print subscriptions and retail sales revenue slipped slightly across the half, this was more than offset by digital subscription and licensing revenue growth. This strong performance in digital will enable us to focus on innovative yield opportunities as we look to further monetize these audiences.Digital advertising revenue declined by 8% across the half, reflecting softness in programmatic advertising late in the period. Print advertising grew by 9%, supported by the performance of key categories like travel, up 65% year-on-year and luxury, which continues to grow. Overall, Publishing costs were broadly flat, notwithstanding an increase in average wages, including the outcome of the EBA and higher paper and distribution costs, which were offset by other cost savings and some timing-related benefits.Domain reported last week and as expected, its result reflected the challenging property environment, particularly in Sydney and Melbourne. On a like-for-like basis, Domain reported EBITDA of $49 million, which was marginally above the guidance provided late last year. Core digital revenue increased by 8%. Of particular note, residential listings revenue was broadly unchanged with growth in controllable yield inclusive of the impact of the new Social Boost all tier offsetting the 9.5% listings volume decline. Revenue from Agent Solutions more than doubled in part due to the acquisition of Realbase in April 2022, while Domain Insights recorded revenue growth of 28%, boosted by a full period contribution from IDS. In a difficult property market, Domain has made clear progress diversifying its revenue base, and building on the foundations of its marketplace strategy.Ongoing costs increased by 29% or $31 million, with around 40% of this increase relating to Domain's acquisitions of IDS and Realbase. Late in the period, and reflecting the prevailing market conditions, Domain undertook a broad-ranging review of its cost base. As a result, FY '23 cost-saving initiatives were identified and implemented, underpinning expectations for FY '23 half 2 costs to reduce by $15 million to $20 million versus half 1.As Total Television evolves, so too must the regulatory framework. We commend the government for their willingness to work with the industry to develop core decisions around issues such as prominence and anti-siphoning, which will help to positively shape the future of Australian television. While we support the government's objective to develop the industry production wise, we feel that its proposed policy to impose Australian content quotas on streaming services would lead to some damaging unintended consequences. We are concerned that this policy will impact all of the local media industry. We are already seeing record levels of investment in Australian productions, while capacity in terms of critical infrastructure and key personnel is stretched and there is already pressure on the generation of new creative ideas and formats. This kind of policy will likely favor global players to the detriment of local media as production costs are pushed higher. We look forward to working cooperatively with the government on this issue to ensure a sustainable outcome for the Australian media industry.I'll now turn to current trading. Momentum has remained positive for Nine in calendar 2023 to date against the backdrop of a softer general economic environment. In Television, Nine has started the year as the clear ratings leader across all key demographics, more than 13 percentage points of share ahead of the next placed channel on a prime time primary channel basis in our targeted 25 to 54s, and around 7 percentage points ahead on a Total People basis. Nine's stronger start to the calendar year in OzTAM history. Reflecting this ratings performance, Nine believes it will continue to grow Total Television share in the current quarter with an increasing contribution from streaming. While the Metro free-to-air market is currently expected to decline in the mid-teens on a percentage basis in Q3, with the absence of the federal election being a key impact, Nine is expecting to grow share with Q3 revenue declining in the high-single digits on a percentage basis.9Now continues its growth trajectory with around 20% revenue growth expected in the March quarter on prior calendar period. Across Total Television, Nine expects its sales team will outperform the underlying market and gain share. In Q3, this equates to an advertising revenue decline for Nine in the low- to mid-single digits on a percentage basis. Total Television costs are expected to increase in the low-single digits in the second half, resulting in FY '23 Total Television cost growth of slightly better than the previous 7% guidance.Nine Radio's Q3 ad revenues are expected to grow in the mid-single digits on a percentage basis, supported by a doubling of digital revenues and with an increasing contribution from streaming.Stan has benefited from strong content performances across the board, underpinning growth in subscribers and Stan's ability to lift pricing with growth expected in both revenue and EBITDA in FY '23.Nine Publishing business continues to benefit from the growth in digital audiences with digital subscription revenue growth expected to be around 4% in Q3. A more challenging advertising and cost environment in half 2 will result in a greater-than-normal EBITDA phasing to the first half.As Domain commented with its result last week, trading in January reflected a continuation of the challenging market environment experienced in Q2 FY '23. Domain's success in signing new and upgraded depth contracts provide significant upside once the market conditions stabilize. Domain is expected to continue to invest in furthering its marketplace strategy while retaining a disciplined approach to cost management. While a more uncertain operating environment has limited half 2 visibility, Nine continues to outperform the broader market from both an audience and revenue share perspective. While remaining disciplined around operating costs, we are confident in pursuing strategic and targeted investments that underpin the growth of our business for the long-term.[Presentation]At this stage, Maria and I have been joined by 2 of Nine's key executives. Our Chief Sales Officer, Michael Stephenson, who I'm sure many of you already know; and our Chief Strategy Officer, Matt Stanton, who joined Nine late last year and has been instrumental in the successful Olympics bid earlier in the year.But before we open up to Q&A, I did want to say a few words about Sport and particularly Nine's recent announcement of the acquisition of Olympics media rights through to 2032. In calendar 2023, Nine has its biggest lineup of sport ever. The page on your screen illustrates the wide range of events that will be available across Nine, NRL, Tennis, Rugby, Cycling, Cricket, Golf to name a few. And our model enables us to work internally and with our sporting partners to ensure the optimal experience for audiences and advertisers. As announced recently, we've secured the rights to the next 5 Olympics culminating in Brisbane 2032. This is a long-term strategic investment for Nine across Total TV, Stan, Publishing and Radio. It's complementary to our existing sports portfolio, which drives audiences to destination and also acts as a strong promotional platform for our programming across the network. It will drive consumption across Nine, growth for 9Now and Stan over the long-term, and it helps define our digital platforms as the destination of choice for Australia.The length of the deal points to the opportunity it gives us to entrench ourselves with audiences and advertisers as Australia's Olympic network. We understand the value of premium sports rights, major sporting events like the State of Origin show us year in and year out that audiences and advertisers are committed and engaged in premium sports and the Olympics is the most premium of all sports. The longevity of the deal also allows us to build value in the partnership on the road to Brisbane and enhances our brand through the association with the Olympics. Australians have never experienced an Olympics like Nine will deliver. There will be unprecedented live coverage of every amazing moment of sporting history across an array of platforms that no media company has ever used in its hosting of Olympic Games. When Cathy Freeman won the 400 meters in Sydney, Australia crowded around the free-to-air television screen to watch 49 seconds of pure emotion. Every Olympic Games delivers iconic sporting moments that engage and unite Australia. And Nine will bring these moments to Australia across its breadth of platforms like never before. Live broadcast across free-to-air, streams, not just through 9Now and Stan, but also embedded in our publishing platforms and our audio assets on big screens, on tablets, on our phones. The broadcast of the Olympic Games provides huge growth opportunities, levering short -- leveraging short-term uplift in consumption to establish those longer-term behaviors.We're now going to open up the lines for questions. So operator, if you could please pass through our first question.
[Operator Instructions] Your first question comes from Fraser McLeish from MST Marquee.
Great. Three from me, if that's all right. Just -- you talked about the Olympics there, Mike. I mean, the big question being, do you think you can kind of break even on it -- on its one right? Or is it likely to be a kind of a loss leader to drive other outcomes across the broader business? That would be my first one. Second one...
We might just take them one at a time, happy to take the 3, but let's cover them off one by one, so we can make sure we get you a full answer. So maybe that one first on the Olympics. Now I mean I think you've heard from the commentary and presentation just now that we believe that Nine's breadth of platforms are uniquely positioned to be able to distribute the games unlike any games that has come before. And with that comes commercial and audience opportunities which are unmatched. But having said that, we do take a very disciplined approach to how we look at sports investment.And Matt Stanton, who's here on the [ couch ] was instrumental in both the assessment of the investment over the long term, but also the deal itself. So maybe, Matt, if you just want to provide a bit of color on how we approach the discipline in sport.
Thanks, Mike. So look, we do take a very disciplined approach, a very considered approach to all our sports rights that we look at for our content. We went through a very detailed process, as Mike says, across a lot of our platforms and across the 10 years and the price that we paid, we think, was within the value equation we look at are very strong. And if it hadn't been, we would have walked away from the deal. So we're very confident on the value we've got with it.
Great. So my second one, probably for Steve, just on the BVOD market. So I think growth was if you strip out the Olympics probably around about 15%, 16% for the market in the half, which is still good, but obviously down at the level -- from the levels would be tracking at. I mean maybe this year is going to be a tougher year because of the economic environment. But are you still confident you can get back to those kind of or get to those 30 sort of percent levels you've previously been talking about on BVOD market growth?
Yes. Thanks, Fraser. Yes, I suppose as per Mike's presentation are also, I guess, the previous commentary that we've given, our focus has really been around the broader digital video market. And the opportunity is that being a part of that $3 billion, $3.5 billion market present for our company based on a unique set of assets. Of course, within that, you've got the BVOD market, which is a subset of that. And there's no doubt that quarter 2 was a tougher quarter. And whilst we're seeing some recovery in quarter 3, I think the trajectory over the course of the next 3 to 4 to 5 years of BVOD growth will change as that market scales, obviously. That being said, I still think, and I'm confident that it will be a major driver of our growth over the midterm.
Okay. And just maybe my final one, just on Stan. It's great to see the originals doing so well. Can you just give us an update on what's going on with sort of been able to get U.S. studio content in these states.
Yes. So you would have heard in the commentary, obviously, the performance of originals of Stan over the summer have been exceptional and they've continued to go from strength to strength. And I think the decisions we made over the last couple of years in terms of not getting to a very premium level in these negotiations around license content is really starting to pay off with the success of originals. Outside of that and having said that, again, we have expected the international market to become a lot less tight in terms of the availability of content.And we're seeing that today. We're seeing that as international studios, distributors and their streaming sides of the business, become a lot more fiscally focused in terms of outcomes that the opportunity for license content is increasing. And so alongside of the strategy for originals, we see a much stronger supply market in terms of international content. So we're very happy with how that's playing out for us.
Your next question comes from Eric Choi from Barrenjoey.
I'll do my questions one by one as well. Just firstly, on the FY '23 outlook, it feels like you guys are pulling levers to limit the ad market impact on your earnings. So just in terms of the numbers, I guess, first half EBITDA fell about $35 million versus first half '22. And I'm wondering if second half '23 declines could be similar. And my reasoning is you're guiding to softer ad markets, but you're also guiding to less TV cost growth and more Stan earnings growth and obviously, domains guiding to a better second half as well.
Thanks for the question, Eric. Look, firstly, we're not going to give specific EBITDA guidance for the second half. But I think suffice to say, if you take our guidance around where we expect the Q3 market to be and where we expect to be within that market and some of the full year cost guidance we've given. I think as you flow that through your model, you'll get a pretty close view on where things are tracking. And you're right in the comment that we have been disciplined around cost in the business, whilst we haven't spoken specifically about a cost out or cost reduction number in half 1, hence what will also occur in half 2 is a reduction in cost versus our own internal budget. So we have been quite disciplined in operating costs that sit outside of the important investments we're making in our business.
Makes sense. About the Steve go. Just on the second question on TV share. If I look at SMI data for January, it suggests NEC was the big share winner and Ten was the big share loser. And my question is, was Ten failing to win any sports rights? How do you think that all share paradigm that we used to think the 40-40-20 changes going forward?
Yes, you're right. We had a great share results in January. We were at a 52% share of the metro free-to-air market, a 44% share of the regional market. And I suspect north of a 60% share in that traditional BVOD marketplace. And there are things that are changing in our market in terms of market dynamics, but the major driver of share growth, of course, is audience. And I think Mike pointed out in his presentation, the dominant share position that we've delivered as we start calendar year '23, which has been a part of a long-term plan in terms of strategic investment into content and sports rights that underpin audience, which ultimately, myself and my team can go and monetize and that is part of a long-term plan that is playing out. Of course, changing market dynamics do create opportunity. And wherever that opportunity exists, strategically, we'll be looking towards that.
Okay. And maybe back to Mike for the last one. 6 months ago, it felt like there was a lot of investor concern around Netflix and the ad funded model. But sort of as Fraser has pointed out, you're going Stan subs and the media's reporting Netflix maybe it has failed to get its audience targets for that ad-funded tier as well. So maybe, Mike, if you could just give us an update on your thoughts around your growth prospects versus your SVOD competitors?
Yes. Look, I think, through the long term, we still see strong growth opportunity for Stan. We've spoken previously about the rationalization of some of that growth that came into subscription businesses during COVID and we're sort of coming out the back end of that, as you see with the net growth we've had since the last time we spoke to the market at Stan and we're obviously coming into a time of a bit more economic uncertainty for consumers. So there's no doubt that will weigh a bit on the subscription market.But Stan has continued to be able to provide positive subscriber momentum. And we believe over the long term that they will be able to continue to do that. I have said previously that we have no immediate plans for the inclusion of advertising on Stan. And every streaming business is quite unique and different. So I won't commentate on what Netflix ad tier or any other streaming service ad tier could look like. But -- we've taken the view that there is clearly an offset of revenue opportunity that comes with advertising, and that comes in the form of cannibalizing premium pricing on tiers and also a disruption to the consumer experience and confusion.And for that reason, we believe backing our BVOD or ad-funded streaming service in 9Now as the destination for free and advertising-funded content and Stan as a clean and premium SVOD service is the right strategy. But of course, we're going to track that market pretty closely.
Your next question comes from Darren Leung from Macquarie.
I might ask 3 as well, please? And my first one sort of follows on that Stan piece. Obviously, on the subscriber number that are approaching 2.6 million. I wanted to segregate that a bit in terms of what's being churn in relation to our competitors versus what's been churn in relation to, call it, broader consumer softness?
Yes. So I think the question was what is the churn impact from consumer softness versus -- what was the first part of that?
Competitors.
Our competitors. Look, I think the landscape in terms of competition in the market hasn't broadly changed across the last couple of years. When I say broadly changed, the market entrants who are in the market today who are competitors to Stan have been in the market now for a couple of years. So generally speaking, the dynamic of the market competitively hasn't changed. And also I don't -- we don't break down our churn numbers into what comes from competitors versus what comes from the consumer sentiment. I would say the underlying competitive landscape hasn't changed in terms of the number of players.Having said that, as you heard in our presentation, Stan's strategy around originals and sport is clearly differentiating Stan as a competitor in the market that has a very unique proposition. So the competitive landscape with the strategy that Stan has standard in very good stead. In terms of consumer sentiment, I don't think we've seen a reaction in the consumer market that feels directly related to consumer sentiment yet. But there's no doubt we will have to wear some of that as we go through the next sort of 6 to 12 months, and we see how interest rates and the broader consumer market plays out.
That's fair enough. On -- the second question was on the similar tax in relation to the publishing business in subscription and licensing. So I know the Total subscribers number hasn't changed, but if we exclude the benefits of the Facebook and Google deals in the period, it looks like Total revenue in this line or sort of call it core revenue in this line has declined. Can you give any color here in terms of whether it's digital subscribers or any transition here, please?
Digital subscription, there will be revenue growth from digital subscription, and it will be offset by some of the other lines. I don't have the specific numbers, but happy to provide a bit more color outside of here, if you like.
Okay. That's fair enough. And then maybe just a final one. On the broader capital management base. Obviously, it's a very, very strong balance sheet. How do you think about the range for the payout ratio? And given the outlook for the out cycle, is there an opportunity to move the dividend towards the upper end?
So towards our -- you're talking about payout ratio. Look, I think we've communicated to market 60% to 80%. We continue to target that range as an appropriate range. There is a bit of uncertainty coming ahead of us, and we feel that our leverage position at this stage, combined with what we're paying out makes the right sense. Of course, we'll assess that as we see the next 6 months play out for the full year results.
Your next question comes from Lucy Huang from UBS.
I've got 3 questions as well. So just firstly, on the Olympics, are you able to give us some color into how you're thinking about how to monetize the Olympics through Stan, like what type of content or games could you be allocating to the Stan platform?
Yes. I think it's a bit early to sort of be breaking down distribution. There's a lot of work going on here at Nine, and you would have heard in the commentary that we certainly have plans to leverage all of our platforms to distribute, commercialize and deliver the Olympic Games to Aussies everywhere in ways that they haven't been before. But a bit too early to sort of be calling out which platforms will host what content. I think suffice to say, it is important to reiterate that in our commitment to Australians and to the IOC, we continue to be committed to ensuring that all of the biggest Olympic Games events are available live and free across our live and free platforms. But details on the distribution still to come, Lucy.
No problem. I'll wait for that as time passes by. Just secondly, in terms of production costs in relation to the Stan originals. I think you mentioned earlier that we are seeing rising cost pressures there. So just wondering if you can give us some color around the economics now between producing Stan originals versus maybe acquiring content from the U.S. producers over time? Like which one makes more sense from a margin perspective?
Yes. In the last couple of years, there has been a fairly significant run-up in the cost of licensing content. And that really drove a much greater preference to originals on a pure one-for-one financial comparison. Of course, originals have a range of other benefits like your ability to control the content that you invest in, the way you schedule that content and the way that you market the content. And as you say, there is pressure, as I've highlighted, in terms of the importance for our government to act. There is pressure on cost of production here in Australia. It hasn't pushed the tables to switching back to a different strategy.In fact, what it's pressured us to do or what it's driven us to do is to consider broader production as the Stan slates continues to grow, it is quite significant. It's around 20 productions. And it actually drives you to consider more international productions that could actually be shot offshore. So I think this is part of the -- I think the message that we need to communicate to government is that there can be some fairly negative unintended consequences of driving requirement to increase production here. And that means companies like Stan, who are already making substantial amounts may have to effectively flow over a little bit of that into international productions that happen outside of Australia. And I don't think that's the preferred or desired outcome.
Yes. No, that makes sense. And then just my last one in relation to the NBC contract. Are you expecting any revenue share losses as a result of the contract going to a competitive platform?
No, the short answer is no. We feel very comfortable with where we've ended up on that. Nine and Stan across the board worked closely with a large number of distribution partners, including other major Hollywood studios. We feel very comfortable with our ability to bring content onto the platform. And in fact, as you heard us say, the prioritization of live programming for 9Now is becoming an increasing driver and opportunity for us. And as you'll see, some of that costs at once would have gone into international content that doesn't perform as well in delivering those big audiences will start to turn up in increasing the strength of our local reality formats, formats that we create here that we co-own and that we distribute around the world. So we're very comfortable with the shift in terms of how we are. We're moving forward with 9Now.
Your next question comes from Kane Hannan from Goldman Sachs.
Maybe just the TV market outlook. So I appreciate that Q3 commentary in the pack. Just can you give us a bit more color around what that looks like on a monthly basis? I mean is it pretty consistent through February, March, April in terms of visibility you have? Or do things start to tail off a bit the further out we go.
Yes. It's difficult to look at it on a monthly basis because there are a number of -- in Q3, there are a number of events that either are or are not happening on a year-on-year basis. Of course, there are no Winter Olympics. And celebrity moved out of there. There's obviously the absence of election money in the pre- or lead up to the election as an example. So different things impacting Total market. Of course, it didn't impact our revenue or our revenue share, and it won't through that quarter. But it is quite difficult to look at it, I think, on a month-to-month basis. What we did give is guidance around mid-teen market decline and Nine's revenue to decline in the high singles from linear TV expected.
Yes, perfect. And then on Stan, so the ARPU growth of 8% despite the double-digit price increases on Stan and premium, and I appreciate the prices went on the base tier went in there for the full period. But is it fair to say that incremental attachment of Stan Sports in the first half was very low? Or is there something I'm missing there you want to think about that ARPU build?
I think the question was incremental subs to Stan Sport. We lost -- is that the question?
Yes. Just trying to tie the incremental sports subs versus that 8% ARPU growth.
Yes. Look, I think -- I mean, there is a seasonality, of course, in sport subscribers, and we're coming back into the 2 of the largest ports in the platform and UEFA Champions League and our local international rugby start to phase back in or just started to phase back into the platform. So over the long-term trajectory for Stan Sport subs that's great, as I said, all the major sports are contributing positively as we had forecasted to do so. But you would have seen a bit of off-season seasonality in the subscriber profile for Stan during the period.
Yes, perfect. And then lastly, just Metro Publishing. Just talk about the different advertising trends in the digital component versus print component. I mean, print was pretty strong, digital tailing off sort of 8% and what drove that?
Yes. I mean we've got our publishing -- Metro publishing business, obviously, is leveraged to digital display as a marketplace. And that market more susceptible to changes in programmatic dynamics, if you like. So the decline really was around the programmatic market declining quicker and, of course, us declining in line with that or slightly better than that decline. Of course, that's being offset by growth in print and the way in which we sell our publishing advertising is a combination of print, handheld or sponsorship, digital and programmatic so they're able to work together to make sure that we mitigate any downside.
Your next question comes from Entcho Raykovski from Credit Suisse.
So my first question is around Total TV. And you've noted a couple of times that election spend impacted the Q3 comps. Can you talk to when the bulk of the election spend came in last year? I'm assuming it was in Q4. And then what sort of impact will that have on the Q4 comps? Do they become more difficult?
Yes. It's -- so the election spend across both political parties plus the election commission, et cetera, et cetera, kind of sort of straddled Q3 and Q4. But the way I think about it is about double the impact in Q4 than we saw in Q3. And of course, UAP were obviously a contributor across both -- across that period.
Okay. Got it. So it's a reasonable conclusion to draw that it does become a little bit more difficult as we head into Q4.
Yes, where the impact is greater in Q4 than it is in Q3.
Okay. Great. And then you've slightly lowered cost guidance in Total TV. And Mike, you mentioned that you're coming in ahead of budget. Are there any particular drivers? Is that lower costs associated with sales, which are driving that better performance? And I mean, obviously, the environment is tougher. So I'm just interested in your thoughts on when you have to consider any specific cost initiatives given those revenue pressures? Or do you think internally that the revenue share is more important, and that's what you want to push for.
Yes. So look, it's a combination of both. Firstly, the -- where the costs have come out is across a range of areas in the business, but this wasn't a reactionary approach that has happened as we've ended the half. As we approach the year, we set ourselves a baseline view of what we thought our cost budget looked like. But we made commitments right across the business to keep given that we had the uncertainty that we knew was coming in the second half. We kept our deployment of costs a bit behind the revenue curve to ensure that we could hold back costs in the event that we're sort of seeing the market conditions, which are now eventuating in Q3 and into this year.So that has been a program and a strategy around how we manage costs in the business since the start of the financial year. Of course, we do have other cost levers in the event that the market is to turn further, and we're keeping a very close eye on that. Having said that, you make a good point in that is that we've continued to reiterate the importance of investment and genuine investment in important parts of our business, and you'll see investment, particularly in content paying off directly in terms of share, in terms of direct revenue and really starting to reset the market paradigm around how Nine is positioned right across our platform. So we feel comfortable with making long-term investments. The strength of our business certainly supports us doing that. But we're very focused on operating costs and discipline around those costs as we go forward.
Okay. Great. And final one for me, hopefully, straightforward one. Do you have a sense for what the production costs will be for the Olympics over the life of the agreement. I mean, I presume you looked into that and you took that into accounting bidding for the rights.
Yes. Of course, when we look at the cost side of the model that we build out when we look at any kind of sport, we look at all costs involved, including production, marketing and any other associated costs. So certainly, that is part of it. We're not going to break out and talk about what those costs are specifically, but we feel comfortable with the experience of Nine in former Olympic Games, we've got a pretty close view on what that looks like. And I think as you've seen since Nine was the broadcaster of London back in 2012, the world of broadcast technology has also shifted significantly, enabling us to take a long-term view around cost efficiencies that are driven by production models and Internet-delivered content across the globe. So we've got some long-term efficiencies that I think we can look forward to as well.
Your next question comes from Roger Samuel from Jefferies.
I've got 2 questions. First one on Total Television. So in your written statement, you mentioned that there was a $20 million in one-off cost for content. Just wondering how much of that drove your revenue share in the first half? And what gives you confidence about getting share in the second half of the financial year, given that here you reduce the cost growth for Total TV?
Yes, I might just take that initially and then it get Steve sort of talk about confidence in share in the second half. Without breaking out the specifics of that investment in content, we feel comfortable that our share gains across the board are all driven by content outcomes. And without allocating them specifically to each show or each aspect, we are very confident that the investments we are making are demonstrating a direct return, as I said, directly into immediate revenue, but also into shifting that paradigm. We are confident about share gains in the second half. And I think Steve can give a bit of color to why we think that confidence is justified.
Yes. We continue to make strategic investment from a content perspective into the schedule. And it's a great example of that is things like My Mom, Your Dad and LEGO Masters going into December and the like that really do extend our schedule to ensure that we've got audiences being delivered against that core demographic from the very 1st of January to the 31st of December every year, and that increasingly, that content can be distributed across multiple platforms, importantly and including 9Now. And it's this kind of consistency of delivery of audience and audience share, irrespective of the platform against those demographics that advertisers are obsessed by that are contributing to the share results that we're delivering.I mentioned we've got off to a flying start in January with a 52% share. Married will carry us through into February and March. We'll be in the order of 44% or 45% share for the quarter and the strength and consistency of our content through new sport and increasingly, entertainment, in particular, live is driving the revenue and revenue share outcomes.
Okay. Great. And my second question is on radio. So you break out the revenue coming from digital, which is very strong, albeit from a small base. How big is this digital revenue can be going to be what happened with television as well with BVOD?
Yes. I think we're seeing a very consistent shift in the way that consumers are changing their behavior. Obviously, it's a different paradigm in audio and different consumer behaviors in television, it was moving to smart TVs and smart devices in radio. It's a combination of smart personal devices and smart devices in the household as well as streaming radio and Carplay in automotive. So there's no doubt that consumer behavior and the consumer technology will continue to drive this. It was important that we highlighted in this result because I think last time we updated the market, we have just seen the first dollars of advertising against our digital streaming proposition start to hit our numbers.And as you've seen pretty quickly, that's ramped up to a material number, and it is the fastest-growing revenue stream in our radio business. So that has the ability to grow and operate in a very similar way to how BVOD has sat alongside our free-to-air network and formed a Total Television opportunity from an audience and a revenue perspective. We expect radio to be the same and we expect it to be material. We're getting numbers just in, in terms of share numbers, and our radio network is delivering a very significant piece of share in terms of the digital live streaming of radio, and it's continuing to give us confidence around the focus in that area and the opportunity that sits ahead of us.I'm not getting anything from the operator. I might take that unless somebody tells me otherwise, that is the end of all of our questions today. So we'll call that a wrap on our results briefing. Thank you for your attendance, and we'll see you again at our full year results in August.