Nine Entertainment Co Holdings Ltd Annual Report 2019

FY2019 Annual Report · Nine Entertainment Co Holdings Ltd

Loading PDF…

Annual Report 2019

OVERVIEW

During FY19, Nine completed the merger with Fairfax Media, creating Australia’s leading integrated media business. Nine
today has a clearly diversified earnings base, with four key operational pillars — Broadcasting, Digital and Publishing, Stan
as well as a 59% stake in Domain. These businesses are all at different stages of their evolution, and are all scale businesses
in their own right. In FY19, on a Pro Forma basis, the traditional Broadcasting business contributed just over half of Group
revenue, down from 84% in FY18, marking a real change in the drivers of Nine for the future.

Result in brief
In FY19, Nine reported Group EBITDA of $350 million, up 36% on FY18, driven by a 40% increase in Group Revenues to
$1.8 billion, reflecting the impact of the merger with Fairfax from 7 December. On a continuing business basis, Statutory Net
Profit after Tax and Specific Items, which were predominately accounting led non-cash items, was $217 million, up 3%.

On a Pro Forma basis, NEC reported Group EBITDA of $424 million, up 10% on FY18, on revenue of $2.3 billion. Net Profit
after Tax and minority interests increased by 16% to $198 million compared to the FY18 result. Earnings per share was
11.6 cents, (+16%) and a full-year dividend of 10c per share, fully franked, was declared.

Revenue1 split FY19

10% Pro Forma EBITDA growth driven by

30%

54%

300

250

200

150

100

-50

-100

-11%

+56%

-17%

FY19

+56% +48%

+48%

FY18

Broadcasting
Digital & Publishing

Domain
Stan

Broadcasting

Digital & Publishing

Domain

Stan

Corporate

Associates

Yr to June, $m, continuing business basis

Revenue2

Group EBITDA2

NPAT, before Specific Items and minorities2

NPAT, before Specific Items2

Statutory Net Profit After Tax, after Specific Items

Earnings per Share, before Specific Items — cents2

Dividend per Share — cents2

FY19

2,341.7

423.8

224.8

198.3

216.6

11.6

10.0

FY18

VARIANCE

2,364.0

385.1

205.9

170.6

209.7

10.0

9.0

-1%

+10%

+9%

+16%

+3%

+16%

+11%

Operating Free Cash Flow for the year, ex the cash impact of the final Warner-related Specific Item, was $269 million.
Net Debt on a wholly-owned basis at 30 June 2019 was $121 million, unchanged from 12 months earlier. During the year,
$170 million was returned to shareholders through dividends, $130 million cash was paid as part of the consideration for
Fairfax, including transaction costs, $166 million was received from the sale of non-core assets and nearly $110 million was
invested in the business, in terms of both CapEx and acquisitions.

Reported, wholly owned basis

30 JUNE 2019

30 JUNE 2018

VARIANCE

Net Debt, $m

Net Leverage

Interest Cover

120.7

0.4x

21.8x

121.3

0.5x

114.5x

+$0.6m

-0.1x

1. Split on an economic share basis.
2. Pro Forma — Consolidates the results of the former Nine and Fairfax for the full 12 months, including the consolidation of Stan. Results
include synergies realised since the transaction was completed. Interest costs associated with the transaction are also for the period
from completion. Pro Forma results are presented on a Continuing Business basis, and exclude Australian Community Media and
Printing (ACM), Stuff New Zealand and Events.

Create Great Content
Distribute it Broadly
Engage Audiences
and Advertisers

C
O
M
P
A
N
Y

O
V
E
R
V
E
W

O
P
E
R
A
T
I
O
N
A
L

H
G
H
L
I
G
H
T
S

TRANSFORMING
INVESTING IN THE PREMIUM
CONTENT THAT DRIVES
PROFITABILITY

BUILDING
USING THE CORE OF BROADCAST
TO POWER GROWTH BUSINESSES

RETURNING
STRONG CASH FLOWS
AND DIVIDENDS TO
SHAREHOLDERS

Broadcasting and
Metro Media
focusing on the
efficient delivery of
premium content

Leading player
in a fast-growing
segment, new
revenue streams
from existing
content spend

Grown brand
to 1.7m-plus
subscribers in
4 years in a new
market segment

Leveraging
Nine’s reach
to grow yield
and geographic
share

Strong cash flow conversion

10¢ fully franked dividend
in FY19, equates
to a yield of ~5%

Chairman’s Address
Chief Executive Officer’s Address
Operational Review
Corporate Responsibility
Nine Cares
Board of Directors
Financial Report
Directors’ Report

2
4
6
18
20
22
24
25

Auditor’s Independence Declaration
Remuneration Report
Operating and Financial Review
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory

31
32
53
59
121
122
129
ibc

C
H
A
R
M
A
N
S

’

A
D
D
R
E
S
S

C
E
O
S

’

A
D
D
R
E
S
S

1
1

NINE ANNUAL REPORT 2019

OPERATIONAL HIGHLIGHTS 2019

Australia’s leading
broadcast brands,
across television
and radio

Reaches 19m
Australians nationally
each week

One of Australia’s
leading digital
publishers, and most
watched commercial
BVOD operator

Reaches 14m
Australians nationally
each month

Broadcasting

Digital and Publishing

#1 FTA RATINGS
SHARE

12 months to June 2019, 25-54s, prime
time, main channel, OzTAM data

#1 Free To Air

revenue share
12 months to June 2019, ThinkTV data

FTA costs
down 4%

NEWS-TALK
AUDIENCE AT
MACQUARIE UP 5%
GfK Mon-Sun Average Audience.
All People 10+, survey 5
2018-survey 4 2019 vs pcp

3% METRO MEDIA

REVENUE GROWTH
AFTER THREE YEARS
OF DECLINES

65%

growth in Metro
Media EBITDA

87%

GROWTH IN EBITDA
FROM 9NOW TO $36M

Australia’s leading
local SVOD business

~1.7m-plus
active subscribers

Evolving Australian
property marketplace
with core upside from
relationship with Nine

6.9m

total audience reach
emma™ conducted by Ipsos,
people 14+ for 12 months ending
March 2019. Nielsen Digital
Content Ratings (Monthly),
people 14+ March 2019

Stan

Domain
(59.2%)

62%

GROWTH IN
SUBSCRIPTION
REVENUE

LAUNCH OF 63 NEW
EXCLUSIVES ACROSS
THE YEAR, SOURCED
FROM 16 DIFFERENT
STUDIOS

EBITDA and
cash flow
break-even
in H2

12%

INCREASE IN
RESIDENTIAL YIELD,
OFFSETTING WEAKNESS
IN KEY PROPERTY
MARKETS

DISCIPLINED COST
MANAGEMENT WITH
UNDERLYING COSTS

DOWN

Realignment of Group
operating structure

Development of products
to further enrich
agent experience

CHAIRMAN’S
ADDRESS

2019 has been a transformational year
for Nine.

The merger with Fairfax, which completed
in early December, has changed the scale
of our business, creating one of the largest
multi-platform media companies in Australia.
It has allowed us to bring together premium
assets that are complementary. It has given
us diversified sources of revenue that overall,
reduce our exposure to adverse cycles. It is
a big development for our business that will
provide greater opportunities in the digital age.
And we retain a balance sheet that provides
further flexibility into the future.

From a results perspective, the benefit of the
diversification is clear. During the year, growth
in our Video on Demand platforms and Metro
Media has more than offset the short term
cyclical issues facing our Broadcasting and
Domain businesses. On a Pro Forma basis, this
resulted in a 10% increase in combined Group
EBITDA for the year, on broadly flat revenues.

But the essence of the merger was based
around more than just short term profit
considerations. Whilst the Nine business
alone was doing well, and had strong profit
momentum, the pace of change in the
media market remains unabated, and we
are determined to ensure that Nine is at the
forefront of the future landscape in Australia.

The fragmentation of traditional media has
been occurring for some time. There is more
competition for audience, and more competition
for revenue. The merger with Fairfax ensures us
a strong future within that environment. We now
have premium assets across multiple platforms,
and therefore a greater ability to invest in
the content that drives audiences and in the
data, research and technology that ensures
our relevance to advertisers. Through Nine,
advertising can now be offered across the
full spectrum of audiences, from mass-market
brand-building to truly addressable advertising.

“We are determined
to ensure that Nine
is at the forefront
of the future media
landscape in
Australia”

Nine’s portfolio of complementary
and inter-related assets places us
in a unique position in Australia.
At the core of our content creation
abilities, Nine boasts a leading
Free To Air TV business and the
traditional mastheads that make
up the Metro Media business. Each
of them creates content, reaching
audiences and generating revenue
across multiple platforms including the
digital platforms 9Now and our Digital
Publishing mastheads. Together, these
create a powerful platform for the
promotion and development of our
other digital assets, namely Stan and
Domain. We have an enviable mix
of assets which together, provide us
great opportunities into the future.

The merger process has gone very
smoothly. This is a testament to all
of our people and their willingness
to accept change and the challenges
that change brings. A merging of
cultures is never easy, but this one has
been successful, and the underlying
business has not missed a beat.

The merger with Fairfax has also
resulted in the combining of our
respective Boards. As a result,
David Gyngell and Janette Kendall
retired from the Nine board in
early December. I would like to
acknowledge the contributions of
both David and Janette over the
years, particularly through the merger
process, and thank them for their
commitment. Additionally, I’d like
to welcome the appointment of
Nick Falloon, Patrick Allaway and
Mickie Rosen to the Nine board
as Non-Executive Directors. It has
been something of a transition
year but your Board settled quickly,
and has been a great support to
the management team throughout
this process.

I would like to highlight two businesses
that are increasingly important to
our future. The first is Stan – our
subscription streaming business.
With the merger, we now have full
control of Stan. This business turned
profitable in the second half of the
year, which is an exceptional result.
In the digital world, start-ups can
attract huge market valuations without
ever turning a profit. With more than
1.7m subscribers, coupled with positive
cash flow, Stan has a strong future.

The second is Domain. Domain
is principally a Digital business.
Although it has been buffeted by the
short term correction in the housing
market, it has a proven model and
track record and will clearly benefit
from a close association with Nine.
Both of these, Stan and Domain,
are growth businesses.

Our advertising businesses are
now in competition with global
players like Facebook and Google.
The Australian Competition and
Consumer Commission (ACCC)
has recently reported on the near-
monopoly these players have in the
areas of search, content aggregation
and social media. They sell advertising
on the basis of reach and targeting
and distribute news and video
content, yet they do not have the
obligations of broadcasters and
publishers. We are highly regulated,
including content, viewing hours,
advertising standards, defamation
and public-decency. They are not.

There remain legitimate concerns
about how they use their market
power to commercially engage with
media businesses with their `take it
or leave it' terms.

The ACCC has rightly acknowledged
that these businesses need regulatory
oversight in areas including
their commercial dealings with
media businesses, the spread of
disinformation on their platforms
and copyright. The ACCC has also
recommended regulatory changes
to level the playing field. We welcome
the steps the ACCC has outlined
to deal with these issues in the
public interest and look forward
to the Government's response to
this well-considered review of the
Digital Platforms.

In a fast-moving and competitive
world, we will continue to focus on
generating superior returns for our
shareholders. We believe the merged
Group enhances our prospects.
We are excited by what the future
has to offer the new Nine, and look
forward to sharing the rewards of
that future with all of our stakeholders.

In this transformational year, we
have completed one of the most
significant mergers in Australian media
history and have emerged a stronger
company. We have continued to
improve the relative performance
of the traditional businesses, while
containing costs, and we have
delivered on our longer-term goal of
broadening the base of our revenue
streams with new and growing digital
assets. We will continue to execute on
this strategy.

PETER COSTELLO, AC
Chairman

C
O
M
P
A
N
Y

O
V
E
R
V
E
W

O
P
E
R
A
T
I
O
N
A
L

H
G
H
L
I
G
H
T
S

C
H
A
R
M
A
N
S

’

A
D
D
R
E
S
S

C
E
O
S

’

A
D
D
R
E
S
S

NINE ANNUAL REPORT 2019

CHIEF EXECUTIVE
OFFICER’S ADDRESS

In 2019, Nine has laid the clear
foundations for its long term growth.

The merger with Fairfax has created a business
with four key operational pillars — the traditional
Broadcasting business, predominantly Australia’s
leading Free to Air broadcaster in terms of ratings,
revenue and profitability; Digital & Publishing —
one of Australia’s most read digital publishers and
leading commercial BVOD operator; 100% of Stan
— Australia’s leading local SVOD business as well
as our strategic 59.2% stake in Domain.

This combination gives Nine an increasingly digital
earnings profile, which will underpin the growth of
the business for years to come.

In terms of the result for the year, a year in which
the cyclical nature of advertising and property
worked heavily against us, we were very pleased to
report 10% growth in Group EBITDA to $424 million.
Net Profit After Tax and before Specific Items was
$198 million, up 16%. We retained our dividend at 10c
per share fully franked which, at the average of the
share price across the year, equated to a yield of
more than 5%. These results are reported on a Pro
Forma basis — so incorporating a full period of the
Fairfax acquisition and excluding the assets that we
have either already sold, or earmarked for sale in
the near future. And so are therefore reflective of
Nine going forward.

The merger came at a time when Nine’s own
business was in great shape. The cost structure
and focus of our Free to Air business had been
significantly reworked and we had positive ratings
and revenue share momentum. Momentum that
continues today. And we had substantially completed
the investments that we needed for the future of
Nine — Stan and 9Now as well as our innovative
sales platform technology, 9 Galaxy. Our balance
sheet was, and remains, strong.

The merger with Fairfax brought operational diversity,
but more importantly, it substantially changed
the growth profile of the Nine business. And with
businesses that were complemented by Nine’s core
Free to Air business either in terms of cross-platform
content or from the tremendous marketing machine
that is Free to Air television. In FY19, on a reported
Pro Forma, ownership-weighted basis, 7% of Nine’s
revenue was sourced from Stan; 9% from Domain
and 30% from our newly formed Digital & Publishing
division which includes the high growth business of
9Now. We will see the mix of both our revenues and
our profitability change even further in the coming
financial year.

Operationally, there were a number of highlights
in FY19.

“Nine has great
momentum, and we
have used this period
to invest in our future”

In a difficult FTA television advertising
market, Nine strongly outperformed.
Our primary channel ratings were almost
6 points clear of the competition in
our targeted 25-54 demographics and
this underpinned a #1 revenue share
for the year of 39.6%, up 1% point on
FY18. This ratings success stemmed not
only from Nine’s consistent favourites of
news, current affairs and entertainment
products like The Block and Married At
First Sight, but also some new content
like Lego Masters. And extraordinarily,
this gain in share was achieved on a
4% decline in operating costs, with the
difficult decision to migrate Nine’s summer
sports allegiances from cricket to tennis
vindicated on every measure.

Spurred by the broad success of
Nine’s schedule, 9Now continued its
dominance of the strongly growing
Broadcast Video On Demand (BVOD)
market. 9Now’s revenue growth of nearly
70% outperformed the overall market
and with much of the associated cost
already expensed through television,
around 80c of each incremental $ of
revenue flowed through to profit. We also
incorporated 9Now inventory into the
9Galaxy sales platform from early 2019,
and were the first local broadcaster to
introduce true addressable advertising
at scale, commencing with 9Now’s live
streaming of the Australian Open. Driven
by further increases in active users, 9Now
will continue to be a strong contributor
to growth into the future.

The other key component of our Digital
& Publishing division, Metro Media, has
outperformed our own expectations on
acquisition. This is a business which has
completely reworked its operating model
over the past three years. A renewed
focus on profitable subscriptions and
on our core print advertising base
has coupled with the growth in digital
advertising and ongoing cost focus to
underpin the division’s first period of
growth in four years. And growth across
both key components — subscription
and advertising. It is a testament to
the business which has now reached
an interesting juncture — subscription
revenues which exceed advertising
revenues, and print advertising revenues
which have stabilised at around 30% of
total group revenues. And it is a business,
which by virtue of the recent sale of
ACM, no longer has ownership, and

Denison Street
From 2020, Nine is
relocating its Sydney
premises with all
businesses relocating
from the current 4
locations to a purpose
built, state of the art
facility at 1 Denison
Street.

the associated fixed cost base, of print
assets.

Stan has had a fabulous 12 months,
consistently surpassing expectations
across all key metrics. The achievement of
positive cash flow in the second half, with
more than 1.7 million increasingly active
and loyal subscribers, is a testament
both to the team involved and Nine’s
willingness four years ago to invest in
a market segment that didn’t really exist
in Australia at the time. Stan’s position
as an aggregator of the best content
from around the world, most specifically
the US and UK, has enabled it to build
a strong and profitable position in this
fast-growing segment.

Domain has operated in a cyclically
challenging property market across the
year, particularly in its core markets
of Sydney and Melbourne. Despite
this backdrop, underlying depth and
yield improvements have continued.
During the year, Domain completed the
reorganisation of its operating structure,
allowing more focus on its core business
of residential and commercial real
estate, and reducing its exposure to
low margin adjacencies. Overlaid with
the opportunities presented by a Nine-
Domain partnership, we remain excited
about our investment in Domain and
believe the leverage will be strongly
positive when the cycle returns to normal.

Our unique suite of assets has brought
with it vast amounts of first-party data
through 9Now, Stan, nine.com.au as
well as the major metro mastheads
and Domain — data which will enable
us to not only provide better platforms
and products for our advertisers, but
also target potential new customers for

our subscription products. Our substantial
first-party database and the way that
will merge with our existing technology
and improved audience measurement,
will start to really take shape in the latter
half of calendar 2019 and creates another
exciting opportunity for Nine to continue
to grow our revenues.

In summary, the new Nine is at a
very exciting stage. The turnaround at
Stan, continued growth at 9Now and
the already implemented synergies
will underpin profit growth for FY20 —
and that is before we see any cyclical
improvement in broadcast or the property
markets. Our balance sheet is strong and
the business is generating significant cash.
It leaves us in a great position to focus
on maximising the performance of our
business, and consolidating our position
as one of Australia’s leading digital
media companies.

It’s been a big year. A big year for Nine,
our staff and the Board who have been
unwavering in their commitment and
support as we continue to redefine our
business. Nine has great momentum and
we have used this period to invest in
our future. These past twelve months have
been both challenging and rewarding
and I thank all my colleagues for the
speed and effectiveness at which they
have approached the opportunity.

I and my team are equally excited about
our future.

HUGH MARKS
CEO

C
O
M
P
A
N
Y

O
V
E
R
V
E
W

O
P
E
R
A
T
I
O
N
A
L

H
G
H
L
I
G
H
T
S

C
H
A
R
M
A
N
S

’

A
D
D
R
E
S
S

C
E
O
S

’

A
D
D
R
E
S
S

NINE ANNUAL REPORT 2019

Broadcasting

BROADCASTING

Nine’s Broadcasting division, which
comprises Nine Network as well as the
consolidated results of Macquarie Media
(of which Nine currently owns a 54.4%
stake), reported EBITDA of $241 million
on revenues of $1,222 million for the year.
These results are reported on a Pro Forma
basis, which reflects the operations of
both businesses for a full 12 month period.

Free to Air Television
The positive operating momentum of Nine’s
Free to Air business continued into FY19 with
growth in both ratings and revenue share
across the year. Coupled with a further
reduction in operating costs, Nine mitigated
much of the impact of a weak Free to Air
(FTA) Television market.

The overall Metro FTA TV market was
challenging in FY19, with the decline of more
than 5% marked by softness in a number
of key advertising categories, including
Financials and Automotive, as well as
the interruptive impact of both State and
Federal elections. Conversely, Nine’s share
of Metro revenues for the year was strong
at 39.6%, up one share point from 38.6%
in FY18, marking Nine’s highest share
since 2000.

This growth in share was achieved on a
4% decline in Nine’s television cost base.
A combination of the change in sports
rights, coupled with continued ongoing
focus on cost management, resulted in
a reduction in overall television costs of
nearly $40 million.

For the year to June 2019, Nine was the #1
Free to Air Network in all of the key buying
demographics1.

Network ratings

25-54s

38.2%

+1.9pts

16-39s

38.4%

+2.5pts

GB+CH

40.5%

+2.6pts

OzTAM data, 12 months to end of June 2019,
6am–midnight.

The most significant change in FY19 was the
replacement of Nine’s summer sport from
a longstanding relationship with cricket to
tennis. The decision was made with many
considerations, not the least of which
was the expectation of markedly superior
economics of tennis at the prevailing rights
prices. On all levels, Nine’s decision has
been vindicated.

From an audience perspective, Nine’s
Summer of Tennis attracted a cumulative
audience reach of nearly 14.5 million people
nationally, with the Australian Open Men’s
Final the highest rating session, attracting
an average audience on Nine of more
than 2 million. Across the Summer, 9Now
recorded more than 6.2 million streams
totalling 121 million minutes.

EBITDA1 contribution — FY19

Broadcasting results2 $m

55%

1,400

1,200

1,000

800

600

400

200

300

250

200

150

100

Broadcasting
Digital & Publishing
Domain

FY18

FY19

Radio

EBITDA

1. On an economic interest adjusted and Pro Forma basis.
2. Pro Forma basis.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

Nine’s entertainment schedule continues to
perform well. Across the year, Nine has an
enviable depth and breadth of content that
entertains Australians. Australian Ninja Warrior
returned for season 2 in July 2018 and was
closely followed by Season 14 of The Block.
Average audiences for The Block of around
1.2 million and 1.7 million people on a 5-city
metro and national basis respectively again
demonstrated Australians' obsession with their
homes and renovations, and the enduringly
successful formula of The Block. Moreover,
it remains the best example of what can be
achieved with original content and an integrated
sales effort that brought more than 30
premium advertising relationships to the show.

The return of Married At First Sight at the
start of calendar 2019, with the lead-in of the
Australian Open Tennis, resulted in 5% growth
in overnight audiences on the previous season
and an average audience, including 9Now, of
almost 2.4 million per episode.

Lego Masters, which launched in April, was
an instant success, with families tuning in to
watch the most extraordinary Lego creations
being imagined and built. In its first season,
Lego Masters averaged an audience of more
than 2 million nationally (including 9Now),
winning all of its time slots and guaranteeing
its return in 2020.

Nine now has a strong and consistent
schedule of premium entertainment content
across the full calendar year. Married at First
Sight, Lego Masters, The Voice, Australian
Ninja Warrior and The Block which has
created an unrivalled proposition for our
advertisers. Moreover, Nine has further
increased its depth around these core titles
— Travel Guides, This Time Next Year, Doctor
Doctor and Hamish and Andy to name a few.



Doctor Doctor
continues to be a
consistent timeslot winner
for Nine — series 3
delivered a national
average audience of
1.2m per episode

Over the past year,
60 Minutes has cemented
itself as the nation’s most
watched weekly public
affairs program



BROADCASTING continued

The more female skew of tennis enabled
Nine to start calendar 2019 with significant
momentum. The lead-in and demographic
alignment of tennis to Nine’s top-rating show
of the year, Married At First Sight, gave
Nine its strongest start to a calendar year
since OzTAM became the measurement
system in 2001.

And thirdly, the move to tennis enabled Nine
to further refine its cost base — both reducing
overall costs, with limited impact on revenue,
but also reducing the portion of Nine’s
~$650 million programming cost base that is
contracted, creating increased future flexibility.

Sport remains a key pillar for Nine. In FY19,
Nine broadcast more than 750 hours of
premium sport across the year, in addition
to around 350 hours of other sports-related
content.

Coupled with tennis in summer, NRL is Nine’s
core winter sport. For the first 24 rounds of
season 2019, Nine’s regular NRL broadcasts
attracted an average audience of around
3.4 million of league supporters each week,
a fertile audience for advertisers chasing that
tight demographic. The State of Origin series
reached a massive 9.9m people nationally —
one of the few events in Australia to reach
such a big audience and accounted for three
of the top ten shows on Australian television
in the year to June 2019.

News is the other key pillar, underpinning
a consistency to both audiences and
advertisers that is crucial. Nine’s commitment
to news is unwavering, and the merger
with Fairfax highlights this commitment —
to be the primary supplier of news to all
Australians, across all demographics, and
distribution platforms.

In FY19, Nine broadcast around 65 hours of
television news and current affairs each week.
Nine’s 6pm news service is almost always one
of the top five shows, attracting a national
Free to Air audience of almost 1.2m people
each night. In addition, Nine’s regional news
coverage sourced directly from 13 different
regional market hubs is broadcast through
the affiliation with Southern Cross. The
Nine news and current affairs brands have
extended their reach through Nine’s digital
publishing platforms, 9.com.au and 9News.com
while Nine’s video content reaches audiences
via FaceBook, Twitter and Instagram as well
as the Metro Media mastheads.

OPERATIONAL REVIEWMacquarie Media (54.4%)
FY19 was a difficult year for Macquarie
Media. While audience performance was
strong, this performance did not translate
through to revenues.

In FY19, Macquarie’s top-rating
News Talk stations 2GB in Sydney and
3AW in Melbourne, combined with the
growing 4BC in Brisbane and 6PR in
Perth for average audience growth
across the network of 5%. Despite this
strong audience performance, revenues
declined by 3%, in a subdued advertising
market. Costs were up by 1%, partially
reflecting the increased investment in
the Macquarie Sports Radio Network
which resulted in a 16% decline in
EBITDA to $27 million.

In August 2019, Nine announced an
off-market takeover offer for all of
the outstanding shares in Macquarie
Media. Successful completion will further
consolidate Nine’s position as a leading
supplier of news and current affairs
content across all the key platforms
— Television, Digital, Print and Radio.
The offer is expected to close later
in 2019.

Travel Guides enjoyed its best
season to date, with a national
series average audience for
season 3 of 1.1m per episode,
up 15% on season 2



O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

Digital & Publishing

DIGITAL & PUBLISHING

Nine’s Digital & Publishing division includes
Metro Media and 9Now, as well as Nine’s
other Digital Publishing titles including
Nine.com.au, Pedestrian TV and CarAdvice.
Together, on a Pro Forma basis,
Digital & Publishing reported revenue
of $637 million and a combined EBITDA
of $130 million, up 56% for the year.

Metro Media
Metro Media performed strongly in FY19,
with revenue growth of 3% coupling with a
5% cost decline, for an EBITDA increase of
65% to $83 million.

There was growth in both advertising and
subscription/circulation revenues across the
year. This result marks an interesting juncture
in the evolution of this business. Not only
have the previous sharp declines in print
revenues stabilised, but the combined
circulation and subscription revenues of
the mastheads now comfortably exceed
advertising, marking a real change in
dynamics of a business that traditionally
relied on advertising for the bulk of its
revenue.

The focus is now clearly on reader revenue,
which will continue to be driven by
distinctive journalism and engaging products.
This has resulted in strong and growing
readership of the Group’s mastheads while
a tightening of the paywall and a focus on

targeted marketing has driven subscription
revenue growth across each of the key titles
— the SMH, the Age and most significantly,
the AFR. Nine’s commitment to content
and specifically to news will result in a
further increase in focus on editorial content
and quality in the future.

There was strong growth in advertising in
digital (+17%) and a real stabilisation in print.
The business attracted an increased share
of digital revenues, while print advertising
has benefited from a renewed appreciation
of the value of the medium to certain
advertising categories, most specifically
Travel and Homewares. Additionally, the
benefit of being part of the larger Nine
Group has been reflected in enhanced
agency relationships across the Metro
Media business.

Metro Media’s strong history on costs
continued in FY19, with total costs declining
by 5%. A key driver to this decline was the
print deal announced with News Ltd in July
2018, which resulted in increased capacity
utilisation at a smaller number of print
facilities owned between the two groups,
with surplus facilities closed. The subsequent
sale by Nine of ACM in June took this one
step further from Nine’s perspective, with
there now being no residual ownership of
print facilities, creating further flexibility in the
business’s cost base longer term.

EBITDA1 contribution — FY19

Digital & Publishing results2 $m

700

600

500

400

300

200

100

FY18

Metro Media
9Now
9Digital

EBITDA

FY19

140

120

100

31%

Broadcasting
Digital & Publishing
Domain

1. On an economic interest adjusted and Pro Forma basis.
2. Pro Forma basis.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

DIGITAL & PUBLISHING continued

This success has been primarily driven by
the broad performance of Nine’s schedule.
In particular, the popularity of Married At
First Sight, The Voice and The Block helped
to underpin a 71% increase in BVOD minutes
for the year.

9Now’s unique single sign-in process has
enabled the development of a proprietary
database which has become a key asset
for Nine, particularly when combined
with the data from Stan, nine.com.au,
the Metro mastheads as well as Domain.
Data will allow advertisers to more
effectively target their audiences, increasing
advertising effectiveness and ultimately
yield. In late 2018, 9Now introduced
addressable advertising, enabling the
serving of differentiated advertising
content to customer bases with specific
gender, age and location characteristics.
From an advertiser's perspective,
addressable advertising brings together
the very best of television and the best
of digital, and 9Now’s signed in user
base gives Nine an important and unique
competitive advantage.

9Now
In 2019, 9Now, Nine’s live streaming
and catch-up service, made significant
progress, both operationally and financially.
Nine’s schedule of premium content has
continued to attract growth in registered
users and audiences, while our ability to
monetise those audiences has improved
with sales focus, education and technology.
On average, around 8% of Nine’s general
entertainment audiences access the content
through 9Now, weighted to catch-up, but
with consumption via both catch-up and live
streaming growing strongly.

Industry-wide BVOD revenue of $125 million
in FY19 was up 38%. Across the year, Nine
grew its share of industry revenues to 49%,
up 10 share points, reflective of its market
leading proposition. This resulted in revenue
growth of 51% to $62 million and an 87%
increase in EBITDA contribution from 9Now
to $36 million.

9Now results, $m

s
n
o

i
l
l
i

65.0

40.9

21.6

FY17

FY18

FY19

Revenue

EBITDA

#11

Commercial BVOD site
By Monthly
Unique Audience
(2.3m)

#12

BVOD revenue share
Year to June 2019
(49%)

#13

Audience share of
BVOD Minutes
Year to June 2019
(45%)

#13

VPM rating for a reality
program with MAFS,
Year to June 2019
Up 86% from
previous season

Source: 1. Nielsen June 2019
2. Think TV
3. OzTAM

OPERATIONAL REVIEW

The inclusion of the 9Now advertising
inventory on 9Galaxy, Nine’s proprietary
advertising platform, from February,
has made it easier for advertisers and
Nine to work together to maximise the
return an advertiser receives for their
advertising dollar.

All of these innovations are expected
to allow 9Now to continue to grow and
expand its position in the broader digital
video market. 9Now is instrumental to the
success of Nine — a distribution platform
adding incrementally to the returns Nine
is achieving on its premium content, and
enabling broader demographics to engage
with this content.

9Digital
9Digital comprises Nine’s digital publishing
assets — namely core digital sites including
network home (nine.com.au), 9News, WWOS
and 9Honey as well Pedestrian TV (recently
merged with Allure Media) and CarAdvice
(recently merged with Drive.com.au).

During the year, Nine reviewed the status
of a number of its digital publishing assets,
resulting in the emergence of a more
consolidated portfolio. This tightening of
focus will continue into FY20.

As a result, and also reflecting the
general weakness of the digital display
market, 9Digital recorded declines in both
revenue and costs, resulting in an EBITDA
contribution of $11 million.

Stuff NZ
Our New Zealand business Stuff delivered
$28 million in EBITDA on revenue of
$253 million. This result reflected the difficult
trading conditions in the New Zealand
market, including the broad withdrawal of
advertising following the March Christchurch
attacks.

Stuff remains an asset held for sale.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S


44%

of the audience
of Love Island
Australia watched
through 9Now

NINE ANNUAL REPORT 2019

Stan

STAN

Stan is Nine’s Subscription Video On
Demand (SVOD) platform. Established
in 2015, Stan is now the lead local
player in what continues to be a rapidly
expanding market.

As audiences demand the option of
on-demand services, and the breadth of
content that brings, Stan has positioned
itself as a key aggregator of premium
exclusive and library content. During FY19,
Stan delivered more than 60 first-run
exclusive premieres, sourced from 16 different
studios and distributors from around
the world.

During FY19, Stan added around 600,000
active subscribers, ending the year with
around 1.7 million active subscribers and a
revenue run rate of around $200 million.
Consistent subscriber adds across the year
were underpinned by exclusive international
content like Billions, Who Is America and
The Truth About the Harry Quebert Affair
sourced from major studios including Sony,
MGM, Showtime and Starz. In addition,
Stan originals like Bloom, The Second and
No Activity captured the imagination of
audiences both in Australia and overseas.

In December, Stan added Disney movies
and television series to the platform, which
added further to the subscriber momentum.

As the subscriber numbers have grown,
so too has their engagement with Stan.
Average hours of viewing per subscriber
continued to increase across the year,
as Australians embraced the platform
and watched increasing hours of SVOD-
delivered content.

The very strong growth in subscribers,
coupled with an average price increase
of around $2 per subscriber from March,
underpinned revenue growth of 62% for the
year to $157 million, and a reduced full-year
loss of $21 million.

Since March, Stan has passed through the
break-even EBITDA point, and this continued
for a second-half EBITDA and cash flow
positive result. This an outstanding milestone
for a business that is just 4½ years old, in
a market segment that did not exist five
years ago and augurs well for the future
of the business.

Stan results, $m

Stan hits 1.7 million subscribers

1,800,000

1,000,000

5
1

n
a
J

5
1

u
J

6
1

n
a
J

6
1

u
J

7
1

n
a
J

7
1

u
J

8
1

n
a
J

8
1

u
J

9
1

n
a
J

9
1

u
J

-10

-20

-30

-40

-50

-60

Revenue
EBITDA

Stan Original series — Bloom
Bloom is Stan’s most successful
original drama to date, securing
two wins at the 2019 TV Week
Logie Awards. Its launch date
on 1 January 2019, marked Stan’s
biggest sign up day on record.
Bloom has also been sold for
distribution into the US market.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

020406080100120140160180FY19FY18 NINE ANNUAL REPORT 2019

Domain
(59.2%)

DOMAIN

Nine’s 59.2% owned, and separately
ASX listed Domain, performed well in
a challenging year for the Australian
property market. In FY19, Domain reported
a 15% decline in EBITDA to $98 million,
from a 6% decline in Group Revenues.

It was a difficult operating market for
Domain, but the business responded
well with growth in yield, underlying cost
reductions and clarified focus overall.

Domain comprises five businesses, all
of which are focussed on consolidating
the Group’s position as a leading Australian
property marketplace. Nine’s proven ability
in marketing and promoting new digital
businesses, coupled with the extensive
combined database, will create significant
opportunities for Domain as it continues
to extend its geographical footprint further
across Australia and deepen its relationships
with the property market participants.

Residential is Domain's largest business,
and contributes more than half of Group
revenues.

Unprecedented weakness in the Australian
residential property market resulted in
markedly lower listing volumes in FY19,
particularly in Domain’s key geographic
exposures of Sydney and Melbourne.
Notwithstanding, Domain’s residential
revenue increased by 0.5%, as a result of
yield growth, driven by both price and
increased depth penetration. Domain’s focus
on delivering a superior value proposition,

utilising its evolving data and analytics
as well as its market-specific approach,
supported this yield performance and should
underpin longer-term growth opportunities
as the property market stabilises.

Media, Developer and Commercial
revenue declined by 13%. This reflected a
challenging market environment for Media
and Developers, and the adoption of a new
operating model for Media (lower revenue,
lower cost). These factors offset 30% revenue
growth in Commercial Real Estate.

Agent Services provides, data, analytics
and reporting tools to the property industry.
Underlying revenue increased by 10% in FY19
as Domain continues to invest in innovation
to enrich both the agent and consumer
experience and to help differentiate the
Domain product.

Domain’s Consumer Solutions business
comprises home loans, insurance and utilities
connections — all markets adjacent to the
core listings business that aim to leverage
Domain’s audience and brand. These remain
early-stage investments for Domain with
significant potential to contribute post this
current period of investment.

Print continues to deliver strategic value to
Domain, from both an agent and consumer
perspective, and is also bundled with the
Group’s digital offerings. Domain managed
costs in this business, partially matching
the declining revenue with a 29% reduction
in costs.

EBITDA split1 — FY19

Domain results, $m

14%

Broadcasting
Digital & Publishing
Domain

Core Digital
Consumer Solutions
Print

Corporate
EBITDA

1. On an economic interest adjusted and Pro Forma basis.

140

120

100

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

050100150200250300350400FY19FY18 NINE ANNUAL REPORT 2019

CORPORATE RESPONSIBILITY

People
Nine is a people business. At the heart
of what we do to create great content,
distribute it broadly and engage audiences
and advertisers are the incredible people
who bring it all together. We are committed
to building an environment that allows
those people to bring their best every day,
that provides them with the opportunity
to create, that empowers them to deliver
outstanding results, and that reflects the
incredible diversity of our audience.

With the merger with Fairfax, the reach
of our business and our audiences, have
increased. So too has the diversity of voices
with which we speak. Merging two strong
cultures, such as those that existed within
both Nine and Fairfax, has not been an
easy task. With respect to the legacy of
both organisations, we are committed to
a culture at Nine that continues to enable
the delivery of our long term strategy.

Caring for our people
The merger marked a significant change
for all our people, regardless of originating
from Fairfax or Nine. We were conscious of
the magnitude of this change, particularly
with many employees exiting the business
at the time. All impacted employees were
given access to support through our
Employee Assistance Program, as well as
outplacement guidance through external
providers. Across Benestar and Converge,
there was a total of 382 people who used
the service in FY19.

During the merger process, we increased
internal communications, and ensured
consistency in messaging to our people
across all sites through the creation of
a merger portal on both company’s
intranets. Leaders, including the CEO, were
encouraged to hold face to face sessions
with their new teams as quickly as possible
post 10 December. Nine’s CEO also held

CORPORATE RESPONSIBILITY

People

Governance

Community

Nine’s Corporate Responsibility strategy is based on the three key pillars illustrated
above. During the year, the merger with Fairfax enabled the Group to combine the best
of the Corporate Responsibility practices of the two groups. Corporate responsibility is
a ongoing focus and Nine will continue to evolve and improve its practices over time.

face to face sessions for editorial staff in
Sydney and Melbourne.

In addition to the support provided through
the integration process, we have continued
to provide holistic care to our people
through the provision of services and
access to external support for health and
wellbeing. In May 2019, we piloted Mental
Health First Aid training, accrediting 10
internal employees as Mental Health First
Aiders. Each metropolitan site now has an
accredited mental health first aider on-site,
and we intend to continue to roll out this
accreditation into FY20. Trauma training,
previously conducted for Nine’s broadcast
journalists, has now been extended to all
our journalists and editorial employees, and
provides tools and support for our people
who are often amongst first responders to
difficult situations.

A significant benefit of the merger was the
ability to leverage the work done by Fairfax
to improve and focus on safety across all
of the merged Group. We have harmonised
all our Health, Safety and Wellbeing policies
across Nine and have commenced group-
wide reporting against key leading and
lag indicators (including Lost Time Injury

Frequency Rate and Hazard reporting). Full-
year reporting on the combined entity will
be provided in the FY20 Annual Report.

Women @ Nine
Nine continues to strongly represent women
across the business, and in particular at
Board level (50% Non-Executive Directors),
CEO-direct report (46%) and broader
NEC management (38%). We believe that
these strong, visible female leaders provide
inspiration and demonstrate our ongoing
commitment to attracting, developing and
retaining women across Nine.

In 2019, we continued to build Women @
Nine, a range of initiatives for our people
centred around development through
mentoring, inspiration and networking.

Women @ Nine consists of the
following initiatives:
• 9Mentor Program, designed to support
the career progression of women at
Nine. Two programs were introduced,
one for senior executives with more than
9 years experience in the media industry
who aspire to leadership roles, and a
second, 9Gen, for those earlier in their

NEC Board

NEC Management

NEC Total Employees

57%

39%

44%

43%

61%

56%

Male

Female

Male

Female

Male

Female

career wanting support and professional
advice for important decisions,
workplace challenges and goal setting.
The 9Mentor Program was launched in
October 2018. 27 women were mentored
by 15 Executives across Nine for a
period of 6 months. Feedback from
both the mentees and mentors was
very positive, and we will continue to
incorporate mentoring into our Women
@ Nine plans.

• Through her Lens a video and event
series to showcase the stories behind
Nine’s leading women and share
inspiration and knowledge. Two Through
Her Lens events have been held. The
first had CEO Hugh Marks interviewing
Tracey Grimshaw on her experiences
in News, whilst our second introduced
Through Her Lens to the wider Nine
Group, with an interview with Kate
McClymont in Studio 22 and live-
streamed across all sites.

• Future Women all Nine employees
received a 12-month subscription to
Future Women, which could be used
for themselves or for a friend or family
member. On International Women’s Day
2019, we extended our free subscription
to all employees of the combined Group.

We plan to continue to build on Women@
Nine into FY20. In addition to the initiatives
above, the following will be launched:
• Women Leading @ Nine

In FY 20, we will pilot the Women
Leading @ Nine program. The 6-month
program is focused on leveraging the
strengths of our mid to senior level, high
potential female leaders. It is designed
to help the talented leaders accelerate
their leadership journey through
applying a strengths-based approach
to development, coupled with three face
to face workshops built around Create,
Distribute and Engage, coaching and
individual challenges.
• Women of Influence

We will leverage the strength of the
Women of Influence awards, previously
run successfully for internal nominees
at Fairfax. The criteria for nomination
will be slightly amended around
Connect (includes collaboration), Create
(innovation), Distribute (customer-centric),
Engage (leadership).

Developing our People
In August 2019, we launched our second
Senior Leadership program with twenty
of our high performing leaders from
across Nine. Working with an external
provider, the program covered critical
areas of leadership including personal
leadership, strategic leadership, disruption
and innovation and leading culture.
Participants were also required to work on
a strategic business project from outside
of their immediate area of responsibility,
and present back to the Executive
Leadership Team. As we look to FY20,
we will review this program, as well as our
approach to management development
across Nine, developing a new language
and expectation for leadership across
the Group.

Engaging our People
In October 2018, Nine ran its first employee
engagement survey, NineConnect. 73% of
our people completed the survey, which
measured both engagement and the
employee experience. The survey was
deliberately conducted pre-merger to allow
us to have a baseline for Nine, as well as
to identify those areas that would require
primary focus post-merger.

Our people overwhelmingly told us they
were confident in our future, proud to
work for Nine, know what they needed
to do to be successful in their role, and
how their role contributed to the goals
of Nine. Opportunities were identified
in communication and management
fundamentals, and these formed the
foundation of our People Integration
strategy.

A short ‘pulse’ survey was conducted
six months post-merger to gather insight
into the integration process, and identify
our strengths and areas to focus on to
accelerate integration. 61% of the total
organisation participated in the survey.
Pleasingly, pride in working for Nine and
confidence in our success over the next
three years continued to be strong, a great
result just six months into the combined
business. However, we know there is more
to do, and have developed action plans
to address focus areas such as internal
communication. A full organisation survey
will be conducted in October 2019.

Governance Council Principles and
Recommendations and corporate
governance best practice.

The Corporate Governance Statement,
Charters and related corporate governance
policies are available on Nine’s website
(http://www.nineentertainmentco.com.au/
investor-centre).

Media Ethics and Content
Regulation
Nine aims to be a good corporate citizen,
by maintaining the trust of the communities
which we are a part of, through responsible
journalism and providing high-quality content.

As a commercial television licence holder,
Nine is bound by the Commercial Television
Code of Practice, which prohibits certain
types of programs and advertisements,
requires classification of program material
and broadcasts in suitable time slots, and
puts limits on the amount of advertising
and other non-programming matter
which can be broadcast. It also promotes
editorial accuracy, fairness and protection
of privacy for individuals in relation to
news and current affairs. The Commercial
Television Code of Practice requires Nine
to ensure advertisers comply with the
AANA Advertiser Code of Ethics and the
AANA Code of Advertising and Marketing
Communications to Children.

Further, Nine’s commercial television licences
issued under the Broadcasting Services Act
are subject to conditions around specific
matter such as advertising of tobacco
and interactive gambling, obligations to
broadcast matters of national interest, and
prohibitions on the broadcast of material
with certain classifications.

Nine’s Metro Publishing business is a
member of the Press Council of Australia.
The Press Council has issued a Statement
of General Principles, a Statement of
Privacy Principles, Specific Principles
covering matters such as the reporting
of suicides, and Advisory Guidelines on
matters such as reporting elections, which
guide the publication of content by Nine.
As a member of the Press Council, Nine
must cooperate with the Press Council’s
consideration of complaints against it and
publish any decisions by the Press Council
following a complaint to Nine.

Corporate Governance
Nine’s Corporate Governance Statement
demonstrates the extent to which Nine
has complied with the ASX’s Corporate

Nine provides regular training for employees
on our obligations as a broadcaster
and publisher and compliance with other
applicable laws, relating to matter such
as defamation and contempt of court.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

NINE CARES

Nine Cares provides a valuable service
utilising Nine’s network of media
assets across television, publishing,
digital and social, and Nine’s role as
a content creator and distributor to
connect communities. Nine’s reach
in terms of both depth and breadth
makes it a unique platform for many
needy individuals and organisations,
and Nine Cares’ commitment to
continuing its role in drawing attention
and support to some of Australia’s
most critical social issues remains
unwavering.

In FY19, Nine Cares managed and
provided almost $23 million of airtime
for Community Service Announcements
(CSAs) for community or not-for-profit
organisations in support of causes
including MND Australia, the Children’s
Tumour Foundation, the Gidget
Foundation, the Melanoma Institute and
the Mark Hughes Foundation. Nine Cares
is committed to providing community
groups with the ability to connect with the
general public and maximise the reach
and understanding of their messages.

During FY19, Channel Nine was again
instrumental in the raising of almost
$20 million for the local children’s
hospitals through telethons in Sydney
and Brisbane. These telethons remain
key to the hospitals' annual fundraising
efforts, with the proceeds used to
provide essential equipment, services and
research. The telethons are televised on
Channel Nine in their local markets, with
many of the Nine’s key talent volunteering
to staff the phone lines, further
encouraging the public’s generosity.

The AFL Footy Show My Room Telethon
raised $1.6 million in a national broadcast
on Nine to support the fight against
childhood cancer.

Nine again joined forces with the
NRL and the broader rugby league
community to help fund brain cancer
research. Through the Beanie for Brain
Cancer Round 19 in July this year,
The Mark Hughes Foundation raised
more than $3 million, helping to fund
research into a cancer that kills more
people under 40 in Australia than
any other cancer and yet receives
less than 5% of government cancer
research funding.

Every day through December, the Today
Show joined forces with a number of
key corporates to give a meaningful
gift to a deserving individual or charity
— The Today Show Advent giveaway.
The recipients were all aligned to Nine’s
key charity partners.


$20m

RAISED FOR SYDNEY
AND MELBOURNE
CHILDREN’S HOSPITALS

$3m

MARK HUGHES
FOUNDATION

30yrs+

NINE’S PARTNERSHIP
WITH STARLIGHT
CHILDREN’S
FOUNDATION

A Current Affair also serves a significant community
interest by publicising news-worthy human interest
stories. Genuinely needy people are provided a forum
to tell their stories, often with incredible outcomes.
Donations of money, care or essential devices are
not uncommon as the nightly 1m-plus audiences are
inspired. A Current Affair also promotes the national
ACA Christmas hamper giveaway where tens of
thousands of dollars worth of food are donated,
packed and distributed to hundreds of needy families.

During the year, Nine celebrated 30 years as media
partner with Starlight Children’s Foundation, and
remains a key platinum partner.

Nine Cares also continues its active involvement in
communities around Australia, sponsoring local council
events and surf clubs, as well as The Monash Children’s
Hospital, the Treasure Chest Charity and the Mothers’
Day Classic, as well as Carols by Candlelight across
many of the Australian capital cities.

The Fairfax Foundation
The Fairfax Foundation, established in 1959 with an
independent charter, provides assistance to current
and former employees and their dependents through
a range of grants and other benefits. The Foundation
provided $774,281 in financial grants and other benefits
to eligible beneficiaries (employees and former
employees of Fairfax Media and associated eligible
companies) during the 2019 financial year.

$50m

in publicity and
assistance through
airtime, program
integration, advertising
and stories

$23m

in CSA airtime
(CSA = Community
Service Announcement)

$90m

raised by telethons
since inception

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

BOARD OF DIRECTORS

Peter Costello
INDEPENDENT
NON-EXECUTIVE
CHAIRMAN

Peter Costello was appointed
to the Board in February 2013
as an independent, Non-
Executive Director and in
March 2016 became Chairman
of the Board. He is also a
member of the Audit & Risk
Management Committee.

Mr Costello is currently
Chairman of the Board of
Guardians of Australia’s
Future Fund and serves on
a number of domestic and
international advisory boards.
He commenced his career as
a solicitor, and then a barrister.
Mr Costello was a member
of the Australian House of
Representatives from 1990 to
2009 and Treasurer of the
Commonwealth of Australia
from March 1996 to December
2007. From 2009, Mr Costello
has worked as a corporate
advisor in the field of mergers,
acquisitions and foreign
investment.

He has a Bachelor of Arts and
a Bachelor of Laws LLB (Hons)
and a Doctorate of Laws
(Honoris Causa) from Monash
University. In 2011, Mr Costello
was appointed a Companion
of the Order of Australia.

Nick Falloon
INDEPENDENT
NON-EXECUTIVE
DEPUTY CHAIRMAN

Prior to the merger of Nine
and Fairfax, Mr Falloon was
chairman of the Fairfax Board
before taking up the role of
deputy chairman of Nine in
December 2018. He is also
chairman of Domain Holdings
Australia. Mr Falloon has
had 30 years’ experience in
the media industry, 19 years
working for the Packer-owned
media interests from 1982
until 2001.

From 2002, Mr Falloon spent
nine years as Executive
Chairman and CEO of Ten
Network Holdings. He holds
a Bachelor of Management
Studies (BMS) from Waikato
University in New Zealand.

Hugh Marks
CHIEF EXECUTIVE
OFFICER AND DIRECTOR

Patrick Allaway
INDEPENDENT NON-
EXECUTIVE DIRECTOR

Hugh Marks was appointed
Chief Executive Officer of Nine
in November 2015. Prior to this,
he had been an independent,
Non-Executive Director since
February 2013.

Mr Marks has over
20 years’ experience as a
senior executive in content
production and broadcasting
in Australia and overseas.
Before his appointment as
CEO, he had ownership and
management interests in
a number of independent
companies providing content
for broadcast and pay TV,
talent management, and
digital production.

Before joining the board
Mr Marks was an authority
member of the Australian
Communications and Media
Authority for more than two
years. Previously he was CEO
of the Southern Star Group.
He has also worked with the
Nine Network as legal counsel,
and was Director of Nine Films
& Television for seven years.

Mr Marks holds a Bachelor
of Commerce/Laws degree
from the University of New
South Wales.

Patrick Allaway served on
the Fairfax Board from April
2016, before moving on to the
new board when Nine and
Fairfax merged in December
2018. He has had 30 years’
experience in the global
financial industry across
capital markets and corporate
advisory; and 16 years Non-
Executive Director experience
across property, retail, media,
and finance.

Mr Allaway commenced his
executive career with Citibank
in Sydney, London and New
York and with Swiss Bank
Corporation in Zurich and
London. He was previously
a Director of Macquarie
Goodman, Metcash, Fairfax,
Woolworths South Africa,
and Chairman of Saltbush
Capital Markets. In May 2019,
he was appointed Non-
Executive Director of the Bank
of Queensland, and will take
over as Chair of the Bank
in October 2019. He is also
a Non-Executive Director of
Domain Holdings Australia.
Mr Allaway has a Bachelor
of Arts/Law degree from the
University of Sydney.

Samantha Lewis
INDEPENDENT
NON-EXECUTIVE DIRECTOR

Mickie Rosen
INDEPENDENT
NON-EXECUTIVE DIRECTOR

Catherine West
INDEPENDENT
NON-EXECUTIVE DIRECTOR

Samantha Lewis joined the Board in
March 2017 as an independent, Non-
Executive Director and is Chair of the
Audit & Risk Management Committee
and a member of the People &
Remuneration Committee.

Ms Lewis has extensive financial
experience, with 20 years at Deloitte
Touche Tohmatsu including 14 years as
a Partner. In that role, she led the audit
of a number of major Australian listed
companies, in the retail/fast-moving
consumer goods (FMCG) and industrial
sectors. During her time at Deloitte,
Ms Lewis also provided accounting advice
and transactional advisory services,
including due diligence, IPOs and debt/
equity raisings.

Since retiring from Deloitte in 2014,
Ms Lewis has been appointed to the
Boards of ASX-listed Orora Ltd and
Aurizon Holdings Ltd and is also the Chair
of the Audit Committee of the Australian
Prudential Regulatory Authority. She is
a Member of the Institute of Chartered
Accountants in Australia, England and
Wales, and is a Member of the Australian
Institute of Company Directors.

Ms Lewis holds a Bachelor of Arts (Hons)
degree from the University of Liverpool.

Mickie Rosen served on the Fairfax Board
from March 2017, before moving on to the
new board when Nine and Fairfax merged
in December 2018. Ms Rosen has nearly
three decades of strategy, operating,
advisory, and investment experience at
the intersection of media and technology.
She has built and led businesses for iconic
global brands such as Yahoo, Fox, and
Disney, and early-stage start-ups such as
Fandango and Hulu.

Ms Rosen currently serves on public,
private, and non-profit boards, and she
advises early to growth stage companies
in digital media and commerce. Until
recently, she served on the board of
Pandora Media, and was the President
of Tribune Interactive, the digital arm
of Tribune Publishing, and concurrently
the President of the Los Angeles Times.
Ms Rosen has also served as a Senior
Advisor to the Boston Consulting Group,
and was a co-founder and partner
of a boutique strategic advisory firm,
Whisper Advisors.

The foundation of Ms Rosen’s career
was built with McKinsey & Company,
and she holds an MBA from Harvard
Business School.

Catherine West was appointed to the
Board in May 2016 as an independent,
Non-Executive Director and is the Chair
of the People & Remuneration Committee
and a member of the Audit & Risk
Management Committee.

Ms West has more than 20 years of
business and legal affairs experience
in the media industry, both in Australia
and the UK. Her most recent executive
role was Director of Legal — Content
Commercial and Joint Ventures for Sky Plc
in the UK. In this role, she was responsible
for all of Sky’s content relationships,
distribution, commercial activities and
joint ventures.

A Graduate Member of the Australian
Institute of Company Directors, Ms West
is currently a non-executive director of
Southern Phones, Vice-President of the
Sydney Breast Cancer Foundation at
Chris O’Brien Lifehouse and a director
of the NIDA Foundation Trust.

Ms West holds a Bachelor of Laws (Hons)
and Bachelor of Economics degree from
the University of Sydney.

O
P
E
R
A
T
I
O
N
A
L

R
E
V
E
W

C
O
R
P
O
R
A
T
E

G
O
V
E
R
N
A
N
C
E

N
N
E

C
A
R
E
S

B
O
A
R
D

O
F

D
R
E
C
T
O
R
S

NINE ANNUAL REPORT 2019

Nine Entertainment Co. Holdings Limited

ABN 60 122 203 892

Financial Report
for the year ended 30 June 2019

CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report — Audited
Operating and Financial Review
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report

25
31
32
53
60
61
62
63
64
121
122

DIRECTORS’ REPORT

The Directors’ present the financial report for the year ended 30 June 2019. The financial report includes the results of
Nine Entertainment Co. Holdings Limited (the “Company”) and the entities that it controlled during the year (the “Group”).

Directors
The Directors of the Company at any time during the financial year or up to the date of this report were as follows.

NAME

TITLE

DATE APPOINTED

DATE RESIGNED

Peter Costello

Independent Non-Executive Chairman

6 February 2013

Nick Falloon

Hugh Marks

Independent Non-Executive Deputy Chairman

7 December 2018

Chief Executive Officer

6 February 2013

Patrick Allaway

Independent Non-Executive Director

7 December 2018

Samantha Lewis

Independent Non-Executive Director

20 March 2017

Mickie Rosen

Independent Non-Executive Director

7 December 2018

Catherine West

Independent Non-Executive Director

9 May 2016

David Gyngell

Non-Executive Director

25 November 2010

7 December 2018

Janette Kendall

Independent Non-Executive Director

5 June 2017

7 December 2018

Peter Costello (Independent Non-Executive Chairman)
Mr Costello was appointed to the Board in February 2013 as an independent, Non-Executive Director and in March 2016 became
Chairman of the Board. He is also a member of the Audit & Risk Management Committee. Mr Costello is currently Chairman of
the Board of Guardians of Australia’s Future Fund and serves on a number of advisory boards. He commenced his career as
a solicitor and then a barrister. Mr Costello was a member of the Australian House of Representatives from 1990 to 2009 and
was Treasurer of the Commonwealth of Australia from March 1996 to December 2007. From 2009, Mr Costello has worked as
a corporate adviser in the fields of mergers, acquisitions and foreign investment.

He has a Bachelor of Arts and a Bachelor of Laws (Hons) and a Doctorate of Laws (Honoris Causa) from Monash University.
In 2011 Mr Costello was appointed a Companion of the Order of Australia.

Nick Falloon (Independent Non-Executive Deputy Chairman)
Mr Falloon was appointed to the Board on 7 December 2018 as an independent, Non-Executive Director. Prior to the merger
of Nine and Fairfax, Mr Falloon was chairman of the Fairfax Board before taking up the role of deputy chairman of Nine in
December 2018. He is also chairman of Domain Holdings Australia. Mr Falloon has had 30 years experience in the media industry,
19 years working for the Packer-owned media interests from 1982 until 2001.

Mr Falloon served as CEO of Publishing and Broadcasting Limited (PBL) from 1998 to 2001 and before that as Chief Executive
Officer of PBL Enterprises and Group Financial Director of PBL. PBL provided a strong background in the television, pay TV,
magazine, radio and digital industries. From 2002, Mr Falloon spent nine years as Executive Chairman and CEO of Ten Network
Holdings. He holds a Bachelor of Management Studies (BMS) from Waikato University in New Zealand.

Hugh Marks (Director and Chief Executive Officer)
Mr Marks was appointed Chief Executive Officer of Nine Entertainment Co. in November 2015. Prior to this, Mr Marks had been an
independent, Non-Executive Director since February 2013. Mr Marks has over 20 years’ experience as a senior executive in content
production and broadcasting in Australia and overseas. Prior to his appointment as CEO, Mr Marks owned talent management
agency RGM Artists and had ownership and management interests in a number of independent companies producing content
for broadcast and pay TV. Before joining the Board, Mr Marks was an authority member for the Australian Communications and
Media Authority for over two years. Previously, Mr Marks was Chief Executive Officer of the Southern Star Group. Mr Marks has
also worked with the Nine Network as legal counsel and then as Director of Nine Films & Television for seven years.

Mr Marks received a Bachelor of Commerce and Bachelor of Laws from the University of New South Wales.

D
R
E
C
T
O
R
S

’

R
E
P
O
R
T

A
U
D
I
T
O
R
S

’

N
D
E
P
E
N
D
E
N
C
E

D
E
C
L
A
R
A
T
I
O
N

R
E
M
U
N
E
R
A
T
I
O
N

R
E
P
O
R
T

O
P
E
R
A
T
I
N
G

A
N
D

F
I
N
A
N
C
A
L

R
E
V
E
W

N
O
T
E
S

T
O
T
H
E

F
I
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

NINE ANNUAL REPORT 2019

Patrick Allaway (Independent Non-Executive Director)
Mr Allaway served on the Fairfax Board from April 2016, before moving on to the new board when Nine and Fairfax merged in
December 2018. He has had 30 years’ experience in the global financial industry across capital markets and corporate advisory;
and 16 years Non-Executive Director experience across property, retail, media, and finance.

Mr Allaway commenced his executive career with Citibank in Sydney, London and New York and with Swiss Bank Corporation
in Zurich and London. He was previously a Director of Macquarie Goodman, Metcash, Fairfax, Woolworths South Africa, and
Chairman of Saltbush Capital Markets. In May 2019, he was appointed Non-Executive Director of the Bank of Queensland and
will take over as Chair of the Bank in October 2019. He is also a Non-Executive Director of Domain Holdings Australia. Mr Allaway
has a Bachelor of Arts/Law degree from the University of Sydney.

Samantha Lewis (Independent Non-Executive Director)
Ms Lewis joined the Board in March 2017 as an independent, Non-Executive Director and is Chair of the Audit & Risk
Management Committee and a member of the People & Remuneration Committee. Ms Lewis has extensive financial experience,
with 20 years at Deloitte Touche Tohmatsu including 14 years as a Partner. In that role, she led the audit of a number of major
Australian listed companies, in the retail/FMCG and industrial sectors. During her time at Deloitte, Ms Lewis also provided
accounting advice and transactional advisory services, including due diligence, IPOs and debt/equity raising. Since retiring from
Deloitte in 2014, Ms Lewis has been appointed to the Boards of ASX-listed Orora Ltd (since March 2014) and Aurizon Holdings
Ltd (since February 2015) and is also the Chair of the Audit Committee of the Australian Prudential Regulatory Authority. She is
a Member of the Institute of Chartered Accountants in both Australia, and England and Wales, and is a Member of the Australian
Institute of Company Directors.

Ms Lewis holds a Bachelor of Arts (Hons) degree from the University of Liverpool.

Mickie Rosen (Independent Non-Executive Director)
Ms Rosen served on the Fairfax Board from March 2017, before moving on to the new board when Nine and Fairfax merged in
December 2018. Ms Rosen has nearly three decades of strategy, operating, advisory, and investment experience at the intersection
of media and technology. She has built and led businesses for iconic global brands such as Yahoo, Fox, and Disney, and
early-stage start-ups such as Fandango and Hulu.

Ms Rosen currently serves on public, private, and non-profit boards, and she advises early to growth stage companies in digital
media and commerce. Until recently, she served on the board of Pandora Media, and was the President of Tribune Interactive,
the digital arm of Tribune Publishing, and concurrently the President of the Los Angeles Times. Ms Rosen has also served as
a Senior Advisor to the Boston Consulting Group and was a co-founder and partner of a boutique strategic advisory firm,
Whisper Advisors.

Prior, Ms Rosen served as Senior Vice President of Global Media & Commerce for Yahoo, where she led Yahoo’s media division
worldwide. Prior to Yahoo, she was a partner with Fuse Capital, a consumer Internet-focused venture capital firm, investing in
early-stage video, publishing, advertising technology, and e-commerce companies. She was also an executive with Fox Interactive
Media, Fandango, and The Walt Disney Company.

The foundation of Ms Rosen’s career was built with McKinsey & Company, and she holds an MBA from Harvard Business School.

Catherine West (Independent Non-Executive Director)
Ms West was appointed to the Board in May 2016 as an Independent, Non-Executive Director and is the Chair of the People &
Remuneration Committee and a member of the Audit & Risk Management Committee. Ms West has more than 20 years’ business
and legal affairs experience in the media industry, both in Australia and the UK. Her most recent executive role was Director of
Legal — Content Commercial and Joint Ventures for Sky Plc in the UK. In this role, Ms West was responsible for all of Sky’s content
relationships, distribution, commercial activities and joint ventures. Ms West is currently a non-executive director of Southern
Phones and a Vice President of the Sydney Breast Cancer Foundation at Chris O’Brien Lifehouse and a director of the NIDA
Foundation Trust.

Ms West holds both a Bachelor of Laws (Hons) and a Bachelor of Economics degree from the University of Sydney.

David Gyngell (Non-Executive Director)
Mr Gyngell was the Company’s Chief Executive Officer from November 2010 until November 2015, having previously served as
the Chief Executive Officer of Nine Network from September 2007. Mr Gyngell became a Non-Executive Director of the Company
in November 2015. He has almost 20 years of experience at the Company and over 25 years overall media sector experience.
Previously, Mr Gyngell was Chief Executive Officer of Granada Television and also Director of International Management Group
and Transworld Media International. He has also worked as Executive Director, Group Marketing and Communications for
Publishing & Broadcasting Limited. Mr Gyngell resigned from the Board on 7 December 2018.

DIRECTORS’ REPORT continuedJanette Kendall (Independent Non-Executive Director)
Ms Kendall was appointed to the Board in June 2017 as an independent, Non-Executive Director and is a member of the People
& Remuneration Committee. Ms Kendall has more than 23 years board experience across public, private and not-for-profit
organisations, spanning a range of industries including marketing and technology, advertising, digital media, supermarkets and
the arts. She is currently a Non-Executive Director of Costa Group (since October 2016), Vicinity Centres (since December 2017),
Wellcom Group (since January 2016), Placer Property and the Melbourne Theatre Company. Ms Kendall is a former senior
executive who has held various roles in her career including Senior Vice President of Marketing at Galaxy Entertainment Group
in Macau, China; Executive General Manager of Marketing at Crown Melbourne; General Manager, Pacific Brands; Managing
Director of emitch Limited; and Executive Director of Clemenger BBDO. Ms Kendall holds a Bachelor of Business — Marketing,
and is also a Fellow of the Australian Institute of Company Directors. Ms Kendall resigned from the Board on 7 December 2018.

Remuneration Report
The Remuneration Report is set out on the pages that follow and forms part of this Directors’ Report.

Directors’ Interests
The relevant interests of each Director in the equity of the Company and related bodies corporate as at the date of this report
are disclosed in the Remuneration Report.

Directors’ Meetings
The number of meetings of Directors (including meetings of committees of Directors) held during the year, and the number of
meetings attended by each Director, were as follows:

BOARD

AUDIT & RISK MANAGEMENT
COMMITTEE

PEOPLE & REMUNERATION
COMMITTEE

MEETINGS HELD*

MEETINGS
ATTENDED

MEETINGS HELD*

MEETINGS
ATTENDED

MEETINGS HELD*

MEETINGS
ATTENDED

Peter Costello

Nick Falloon

Hugh Marks

Patrick Allaway

Samantha Lewis

Mickie Rosen

Catherine West

David Gyngell

Janette Kendall

—

* The number of meetings held refers to the number of meetings held while the Director was a member of the Board or Committee.

Company Secretary

Rachel Launders (General Counsel and Company Secretary)
Ms Launders was appointed joint Company Secretary on 4 February 2015 and became sole Company Secretary on 29 February 2016.
Ms Launders holds the role of General Counsel and Company Secretary at the Group. Prior to joining the Group in January 2015,
Ms Launders was a partner at Gilbert + Tobin for over 13 years where she specialised in mergers and acquisitions, corporate
governance and compliance.

Ms Launders holds a Bachelor of Arts and Bachelor of Laws (Hons) from the University of Sydney. She also completed the
Graduate Diploma of Applied Finance and Investment at the Financial Services Institute of Australasia and is a Fellow of the
Financial Services Institute of Australasia and a graduate of the Australian Institute of Company Directors.

D
R
E
C
T
O
R
S

’

R
E
P
O
R
T

A
U
D
I
T
O
R
S

’

N
D
E
P
E
N
D
E
N
C
E

D
E
C
L
A
R
A
T
I
O
N

R
E
M
U
N
E
R
A
T
I
O
N

R
E
P
O
R
T

O
P
E
R
A
T
I
N
G

A
N
D

F
I
N
A
N
C
A
L

R
E
V
E
W

N
O
T
E
S

T
O
T
H
E

F
I
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

NINE ANNUAL REPORT 2019

Principal Activities
The principal activities of the entities within the Group during the year were:
• Broadcasting and program production across Free to Air television and metropolitan radio networks in Australia;
• Publishing across digital platforms and newspapers;
• Real estate media and technology services; and
• Subscription video on demand.

Dividends
Nine Entertainment Co. Holdings Limited paid an interim dividend of 5 cents per share, fully franked, in respect of the year ended
30 June 2019 amounting to $85,131,858 during the year. Since the year-end, the Company has proposed a final dividend of 5 cents
per share, fully franked, in respect of the year ended 30 June 2019 amounting to $85,131,858.

The Company declared and paid a final dividend of 5 cents per share, fully franked, in respect of the year ended 30 June 2018
amounting to $43,557,105 during the current year.

Corporate Information
Nine Entertainment Co. Holdings Limited is a company limited by shares that is incorporated and domiciled in Australia. It is the
parent entity of the Group.

The registered office of Nine Entertainment Co. Holdings Limited is 24 Artarmon Road, Willoughby NSW 2068.

Review of Operations
On 7 December 2018, the Group merged with Fairfax Media Limited (“Fairfax”) (see below). The operating results include the
results of Fairfax and Stan for the period from 7 December to 30 June 2019, Stan having been consolidated in the Group’s
accounts from 7 December 2018.

For the year to 30 June 2019, the Group reported a consolidated net profit after income tax of $233,880,000 (2018: $209,666,000).
This included $17,314,000 from discontinued operations (2018: Nil).

The Group’s revenues from continuing operations for the year to 30 June 2019 increased by $561,129,000 (40%) to $1,965,074,000
(2018: $1,403,945,000).

The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) and before specific items (Note 2.1) for
continuing operations for the year ended 30 June 2019 was a profit of $349,862,000 (2018: profit of $257,237,000).

The Group’s cash flows generated in operations for the year to 30 June 2019 were $221,570,000 (2018: generated in operations:
$161,087,000).

Further information is provided in the Operating and Financial Review on pages 53 to 58.

Significant Changes in the State of Affairs
Merger with Fairfax Media
On 7 December 2018, the Group merged with Fairfax by acquiring all of the outstanding shares in Fairfax, in return for the issue
of 0.3627 shares in Nine and 2.5 cents per Fairfax share. Refer to Note 6.1 for details.

Other acquisitions
On 5 November 2018, the Group acquired the remaining 40.78% of CarAdvice.com Pty Ltd’s shares which it did not already own
for a cash consideration of $26.5m. On 10 April 2019 the group acquired the remaining 41.3% of 112 Pty Ltd (the business known
as “Drive”) which it did not already own in return for 12% of shares in CarAdvice. Refer to Note 6.1 for details.

On 14 December 2018, a controlled entity of the Group, Domain Holdings Australia Limited, through a partially owned subsidiary
(Commercial Real Estate Media Limited (“CREM”)) acquired a 100% interest in Commercialview.com.au Limited, an Australian
commercial property portal, for consideration of $8.2 million in newly issued CREM shares and $1.9 million in cash. Refer to
Note 6.1 for details.

DIRECTORS’ REPORT continuedDiscontinued operations and disposals
Following the acquisition of Fairfax on 7 December 2018, the Board agreed to sell Stuff NZ, Australian Community Media (including
printing operations) and Events, wholly owned businesses of Fairfax. Consequently, the Group classified these businesses as a
disposal group held for sale and as discontinued operations. Australian Community Media (including printing operations) was sold
on 30 June 2019, and Events was sold on 31 May 2019. The sale of Stuff NZ is expected to be completed within a year from the
date of the initial acquisition.

Significant Events after the Balance Sheet Date
On 12 August 2019, the Group announced to the ASX an offer to acquire the remaining shares in radio broadcaster Macquarie
Media, being those the Group did not already own.

The Group inherited the majority shareholding in Macquarie Media following its merger with Fairfax Media in December 2018.

The offer will result in the Group paying $113.9 million (at $1.46 per share) for the remaining 45.6 percent stake, provided enough
shareholders accept the offer to lift Nine to 90 percent (and the Group can then acquire the remainder).

The acquisition will be 100 percent financed from cash reserves and existing debt facilities. Subject to obtaining Macquarie Media
shareholder acceptances, the transaction is due to complete by December 2019.

Other than noted above, there has not arisen in the interval between the end of the financial period and the date of this report
any item, transaction or event of a material and unusual nature, to affect significantly the operations of the consolidated entity,
the results of those operations, or the state of affairs of the consolidated entity, in future years.

Likely Developments and Expected Results
Other than the developments described in this report, the Directors are of the opinion that no other matters or circumstance will
significantly affect the operations and expected results of the Group.

Unissued Shares and Options
As at the date of this report, there were no unissued ordinary shares or options. There have not been any share options issued
during the year or subsequent to the year-end.

Indemnification and Insurance of Directors and Officers
During or since the financial year, Nine Entertainment Co. Holdings Limited has paid premiums in respect of a contract insuring
all the Directors and officers of the parent entity and its controlled entities against costs incurred by them in defending any legal
proceedings arising out of their conduct while acting in their capacity as Director or officer of Nine Entertainment Co. Holdings
Limited or its controlled entities. The insurance contract specifically prohibits disclosure of the nature of the insurance cover, the
limit of the aggregate liability and the premiums paid.

Auditor’s Independence Declaration
The Directors have received the Auditor’s Independence Declaration, a copy of which is included on page 31.

Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify Ernst & Young during or since the financial year.

Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided by the auditor during the year are set out in
Note 7.3 of the financial statements.

The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.

D
R
E
C
T
O
R
S

’

R
E
P
O
R
T

A
U
D
I
T
O
R
S

’

N
D
E
P
E
N
D
E
N
C
E

D
E
C
L
A
R
A
T
I
O
N

R
E
M
U
N
E
R
A
T
I
O
N

R
E
P
O
R
T

O
P
E
R
A
T
I
N
G

A
N
D

F
I
N
A
N
C
A
L

R
E
V
E
W

N
O
T
E
S

T
O
T
H
E

F
I
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

NINE ANNUAL REPORT 2019

Rounding
The amounts contained in the financial statements have been rounded off to the nearest thousand dollars (where rounding is
applicable) under the option available to the Group under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191. Nine Entertainment Co. Holdings Limited is an entity to which the Instrument applies.

Signed on behalf of the Directors’ in accordance with a resolution of the Directors’.

PETER COSTELLO, AC
Chairman

Sydney, 22nd August 2019

HUGH MARKS
CEO

DIRECTORS’ REPORT continued
AUDITOR’S INDEPENDENCE DECLARATION

to the Directors of Nine Entertainment Co. Holdings Limited

Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au

Audit or’s Independence Declarat ion t o t he Dir ect ors of Nine
Ent ert ainment Co. Holdings Limit ed

As lead auditor for the audit of Nine Entertainment Co. Holdings Limited for the financial year ended
30 June 2019, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Nine Entertainment Co. Holdings Limited and the entities it controlled
during the financial year.

Ernst & Young

Christopher George
Part ner
22 August 2019

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

D
R
E
C
T
O
R
S

’

R
E
P
O
R
T

A
U
D
I
T
O
R
S

’

N
D
E
P
E
N
D
E
N
C
E

D
E
C
L
A
R
A
T
I
O
N

R
E
M
U
N
E
R
A
T
I
O
N

R
E
P
O
R
T

O
P
E
R
A
T
I
N
G

A
N
D

F
I
N
A
N
C
A
L

R
E
V
E
W

N
O
T
E
S

T
O
T
H
E

F
I
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

NINE ANNUAL REPORT 2019

REMUNERATION REPORT – AUDITED

1 Key Management Personnel

2 Executive Summary

2.1

Summary of Executive Remuneration Outcomes

3 Executive Remuneration

3.1

Remuneration Principles

3.2 Approach to Setting Remuneration

3.3 Remuneration Mix (at target)

3.4 Fixed Remuneration

3.5 Short-Term Incentive (STI) Plan

3.6

Long-Term Incentive (LTI) Plan

4 Linking Pay to Performance

4.1

Impact of Nine’s 2019 performance on remuneration

4.2 Short-Term Incentives (STI)

4.3 Long-Term Incentives (LTI)

5 Executive Agreements

6 Remuneration Governance

6.1

The Board

6.2 People and Remuneration Committee (PRC)

6.3 Management

6.4 Use of Remuneration Consultants

6.5 Associated Policies

7 Detailed disclosure of executive remuneration

7.1

Statutory remuneration disclosures

7.2 Non-statutory remuneration disclosures

7.3 Performance Rights and Share Interests of Key Management Personnel

8 Non-Executive Director (NED) Remuneration Arrangements and detailed disclosures of NED remuneration

Loans to Key Management Personnel and their related parties

10 Other transactions and balances with Key Management Personnel and their related parties

Letter from Committee Chair
On behalf of the Board, I am pleased to present the Company’s Remuneration Report for financial year 2019 (FY19).

This year the Company has undergone a significant strategic transformation with the successful merger between Nine and Fairfax
Media Limited (Fairfax) to create one of the largest multi-platform media companies in Australia. The merger provides the Group
with a diverse suite of assets across television, digital, publishing and radio which in turn provides a greater audience reach and
diverse revenue growth streams, providing the foundations for future long-term growth.

The executive team has successfully completed the merger and delivered strong results despite challenging external market
impacts on the advertising and property markets. The team has delivered Pro Forma FY19 EBITDA1 of $423.8 million representing
10% growth. Net Profit After Tax and before Specific Items is $198 million for the year, up 16%, also on a Pro Forma basis.
Nine’s FTA revenue share grew 1 share point to 39.6% and was achieved on a 4% lower cost base. Across the Group, annualised
cost synergies of $50 million were realised. Digital and Publishing has grown EBITDA by 56%, with Metro Media revenue up 3%
resulting in 65% EBITDA growth. 9Now performed strongly in the BVOD market with 51% revenue growth and 87% growth in
EBITDA. Stan achieved positive EBITDA in the second half of FY19, with more than 1.7 million active subscribers. Domain has been
affected by the housing cycle but has achieved growth in yield from both pricing and depth penetration. The team successfully
sold Australian Community Media and part of the Events business during the year.

In FY19 there were no changes to the structure of executive incentive arrangements. The Board remains committed to an
executive remuneration framework that is focused on driving a performance culture and linking pay to the achievement of Nine’s
long-term strategy and business objectives. These in turn drive long-term shareholder value. For Executive KMP a portion of any
Short-Term Incentive and the entire Long-Term Incentive is delivered in the form of deferred equity aligning a significant amount
of any awards earned with shareholder interests, and supporting the retention of key executives.

During the financial year there was no increase made to the CEO’s fixed remuneration and the Non-Executive Director base pay
and committee fees remained unchanged in FY19.

Short-Term Incentives
In FY19 the Short-Term Incentive Plan for Executive KMP remained the same as FY18, with 60% allocated to achievement of the
Group EBITDA target and 40% allocated to individual objectives which were made up of financial and strategic objectives aligned
to Nine’s strategy.

The Group financial STI target was originally the budgeted Group EBITDA for Nine. Following the merger with Fairfax, the Board
revised the Group EBITDA target. The new target comprised of the original Group EBITDA budget set at the beginning of the
financial year for Nine and forecast EBITDA for the continuing businesses of Fairfax following the merger. The target was also
adjusted to reflect targeted synergies to be delivered within the year. The final Pro Forma FY19 EBITDA1 result of $423.8 million
was just below the level required to achieve a 50% payment requiring the Board to consider the payment level. The Board
considered that the business had performed strongly on underlying key metrics to achieve that outcome, particularly in relation to
revenue share growth, over achievement of cost targets and cost synergies and strong performance of growth assets. The Board
considered the external market factors of a decline in the overall television market and the weaker listings environment on Domain
and determined that based on the strong performance of the business on the aforementioned key metrics, the Group EBITDA
result warranted a payment of 50% of target opportunity. The individual STI outcomes were assessed against specific targets
and awarded where achieved. The combined group and individual FY19 short-term incentive payments to Executive KMP were
consequently below target levels at payouts of 69% and 70% of target opportunity.

1. See page 44 for definition.

D
R
E
C
T
O
R
S

’

R
E
P
O
R
T

A
U
D
I
T
O
R
S

’

N
D
E
P
E
N
D
E
N
C
E

D
E
C
L
A
R
A
T
I
O
N

R
E
M
U
N
E
R
A
T
I
O
N

R
E
P
O
R
T

O
P
E
R
A
T
I
N
G

A
N
D

F
I
N
A
N
C
A
L

R
E
V
E
W

N
O
T
E
S

T
O
T
H
E

F
I
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

NINE ANNUAL REPORT 2019

Long-Term Incentives
The FY17 Long-Term Incentive Plan (LTI) grant was tested at the conclusion of FY19. The required targets for the FY17 LTI grant
were Total Shareholder Return (TSR) and Earnings Per Share Growth (EPSG) measured over a three year performance period.

The TSR performance was above the 75th percentile, resulting in vesting of 100% of the rights attributable to that hurdle.
The EPSG performance was tested using statutory results pre-specific items and prior to the impact of purchase price accounting
amortisation as a result of the merger. That is, it applied results for legacy Nine up to the merger date and the consolidated
merged entity thereafter, pre-specific items. The EPSG performance was also achieved at maximum performance, resulting in
vesting of 100% of the rights attributable to that hurdle. This resulted in participants receiving the maximum possible benefits
under the FY17 Long-Term Incentive Plan.

On behalf of the Board I would like to thank our executives and the whole Nine team for executing the strategic priorities of
the business in a transformational year for Nine to drive long-term performance and value for shareholders.

I trust you will find this report informative. I encourage you to vote in favour of the report, and welcome any questions at the
Annual General Meeting.

Yours faithfully,

CATHERINE WEST

Chair of the People and Remuneration Committee

REMUNERATION REPORT – AUDITED continued1 Key Management Personnel
The Remuneration Report details the remuneration framework and arrangements for Key Management Personnel (KMP), as set
out below for the year ended 30 June 2019. KMP are those persons having authority and responsibility for planning, directing and
controlling the major activities of the Group, directly or indirectly, including any Director (whether Executive or otherwise) of the
Company. The tables detail movements during the 2019 financial year and current KMP and Directors.

Key Management Personnel

NAME

POSITION

TERM 2019

Non-Executive Directors (NEDs)

Peter Costello

Nick Falloon1

Patrick Allaway1

David Gyngell1

Janette Kendall1

Samantha Lewis

Mickie Rosen1

Catherine West

Executive Director

Chairman (Independent, Non-Executive)

Full year

Deputy Chairman (Independent Non-Executive)

From 7 December 2018