The recent downfall of Network Ten was expected to push the Australian government in favor of introducing noteworthy changes to media laws to aid the industry. Further, the in-principle support for the legislation by a few senators after the announcement of voluntary administration by Ten Network Holdings (Australia's third-largest TV station) is providing the possibility of major changes to existing media law according to the industry needs. The expected major proposals by the industry are, removal of the "reach rule" rule as it prevents a single TV broadcaster from reaching more than 75% of the population in the licensed area, and two-out-of-three law, that prevent companies from controlling radio, television and newspapers.

   Nine Entertainment Co Holdings Ltd

   
NEC Details

During H1FY17, Nine Entertainment Co. Holdings Ltd (ASX: NEC) had reported 4.5% and 6.4% year-on-year (yoy) decline in revenue and EBITDA at $659 million and $120 million respectively. Net Profit after Tax declined by about 4% yoy to $75 million. Results were impacted by specific Items of $312 million after tax, primarily a $260 million non-cash impairment of goodwill and the $85m (pre-tax) settlement to exit key elements of the output deal with Warner Bros. However, the company witnessed 71% growth in registered users and 74% growth in catch up streams at 9Now across six months. Further, the company disposed of its interest in Southern Cross Media (SXL) during the period for a pre-tax gain of $29m. Interestingly, on-demand businesses are growing strongly and its AVOD platform & 9Now with more than 2.9m registered users providing a growing first-person database that enables advertisers to target audiences.The company’s SVOD Joint Venture Stan, is clearly the leading domestic player in a growing space with more than 700,000 active subscribers and heading towards positive cash flow during FY18.

Stock has moved up by 26.5% over the last six months as on June 16, 2017 and currently trading at close to 52-week high. However, we believe that the implementation of new regulations and changes in media law will provide some relief for the industry.  We give a “Buy” recommendation on the stock at the current price of $ 1.35
 

NEC Daily chart; (Source: Thomson Reuters) 

Seven West Media Ltd

SWM details

SWM to launch 100% owned long-form video catch-up TV digital product and platform: Seven West Media Ltd (ASX: SWM) confirmed amendments to its Yahoo7 joint venture agreement. As per the new agreement, which coincides with the completion of Verizon’s acquisition of Yahoo, Inc. and the formation of Oath, will continue to invest in the market-leading Yahoo7 joint venture in Australia. Both Seven West Media and AOL/Verizon will also explore broader opportunities that build on Oath’s consumer brands, original content, ad tech, proprietary data and potential acquisitions to further scale Yahoo7 in the region. Under the new agreement, SWM will launch and market its own long form catch-up TV service with TV content currently on PLUS7 and offer that exclusively through a separate, new and fully owned Seven platform within six months. Further, Yahoo7 JV will be tasked with exploring new opportunities with a broader content set including content from AOL/Verizon. We give a “Buy” recommendation on the stock at the current price of $ 0.66


SWM Daily chart; (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.