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Nine targets removal of Ashes, Cricket World Cup to cut costs

Nine Entertainment chief executive Hugh Marks has pinpointed the removal of one-off sports coverage such as The Ashes and the Cricket World Cup to cut down on costs, according to the Australian Associated Press.

He said that the Australian media company will target a reduction of up to A$100m (€60.4m/$65.8m) in annualised costs over the next three years, adding these were “costs that will not inhibit our ability to continue to invest in the growth opportunities around premium revenue and digital video”.

Nine holds the rights to International Cricket Council events in Australia, including the Cricket World Cup, from 2020 to 2023. It held the rights to last year’s England-hosted Ashes series.

The cost-cutting measures follow a nine-per-cent fall in net profit to A$114m for the six months to December 2019. Nine also reported group earnings before interest, taxes, depreciation and amortisation (Ebitda) of A$251m and revenue of A$1.2bn.

It struck a deal to merge with rival Australian media company Fairfax Media in July 2018. That agreement saw Nine, a major sports broadcaster in the country, acquire a 51.1-per-cent stake in the combined business.

Nine posted strong growth in its digital video businesses, with streaming service Stan posting Ebitda improvement of A$35m as subscribers passed the 1.8 million mark. On-demand service 9Now experienced 65-per-cent growth in Ebitda.

Marks added: “We have invested in technology through 9Galaxy which will enable our inventory to be traded seamlessly, and in a premium content mix that works across linear and on-demand television. Positioning us to compete more effectively with the global technology companies for revenue.

“Recognising this company-wide evolution, we believe there is significant potential to refocus the cost structure of our FTA business, targeting the removal of up to A$100m in annualised costs over the next three years – costs that will not inhibit our ability to continue to invest in the growth opportunities around premium revenue and digital video, as we have done successfully over the past three years.”

The Sydney Morning Herald newspaper has previously reported that Nine was one of a number of broadcasters asked by Rugby Australia to sign a non-disclosure agreement relating to the governing body’s next rights package, which went to market earlier this month.

The Herald has now reported that Rugby Australia has placed a protective clause into the tender documents that ensures all bidders express a serious interest in the rights or risk missing out. It is thought that the provision has been included to ensure a fair competitive process.

Rights on offer include national team matches, as well as a package of rights from Sanzaar, rugby union’s governing body in South Africa, New Zealand, Australia and Argentina, which includes the Super Rugby club competition and the Rugby Championship national team tournament.

Rugby Australia’s current five-year rights agreement with Foxtel runs from 2016 to 2020 and is worth a total of A$285m. In the current deal, Foxtel sublicenses one delayed Super Rugby match per week to free-to-air network Ten, while Ten simulcasts all of Australia’s domestic tests, the Bledisloe Cup and all Australia matches in The Rugby Championship.