We added the media group to the portfolio last week as part of a broad suite of changes. The company runs across 4 segments: Broadcasting, Digital & Publishing, Stan & Domain. Its ~54% interest in Domain (DHG) is worth ~$1b, or ~30% of the group’s value. Digital & Publishing make up ~20% of revenue and had a standout 1Q on the back of subscription growth +5% and total advertising revenue +13%. Broadcasting makes up 50% of the revenue generated. Television and radio both saw strong revenue growth in the first quarter, though conditions are expected to moderate into the end of the year as they cycle strong prior periods.
In our view, the market is too bearish on its broadcasting. We also see further upside in their Stan investment with rising Average Revenue Per User (ARPU) as well as strong momentum in sales. Nine have also flagged the potential to divest some of its interest here which could further unlock value for shareholders. At just 11x expected FY23 PE, Nine is undervalued and recent numbers suggest the underlying business is holding up better than expected.
MM is bullish & now long NEC in the Emerging Companies Portfolio
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