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Nine targets 60% digital revenue by FY27 while SXL merges with Seven to build a $2 billion 'Total Media' powerhouse.
David Kennedy · Venture InsightsPeriod: H1 FY268 min read
Last updated
Decline in traditional Australian television advertising market spend
Nine Entertainment H1 FY26 Group EBITDA on a continuing basis
Seven's record share of the Total Television market post-merger
Growth in Nine's total underlying subscription revenue
Increase in Stan's EBITDA to a record $36.6 million
Targeted cost synergies for the Southern Cross Media and Seven merger
The Australian media sector is undergoing a significant structural shift as legacy broadcasters pivot toward digital-first models to combat the decline of linear advertising. This report analyzes Nine Entertainment's strategy of digital specialization and portfolio optimization, including its acquisition of QMS Media, alongside Southern Cross Media's landmark merger with Seven West Media. By evaluating financial performance across subscription, audio, and television divisions, the analysis highlights how scale and digital acceleration are being used to defend against global platform competition.
Both companies are navigating an Australian advertising market that remains "frustrating" and "soft". Traditional television has been the hardest hit, with a market decline of over 10%. However, both NEC and SXL have proven that they can take market share from competitors in this environment.
Nine maintains a 40.3% share of the Total Television market, while Seven (now part of SXL) reached a record 44.1% share.
The short-term outlook (CY26) has started on a "positive note" according to Nine management, with strength in subscription markets and a more positive start in advertising.
SXL has also noted a 3% increase in total TV advertising revenue for January 2026, though it remains cautious about the rest of the year.
| Sector | Market Direction | Strategic Implication |
|---|---|---|
| Linear TV Advertising | (10% - 12%) | Requires aggressive cost-out and BVOD transition. |
| Metro Radio Advertising | (7% - 8%) | Driving consolidation and exit of smaller players. |
| Digital Audio / Podcasting | +20% CAGR | Key growth engine for LiSTNR and 9Now audio. |
| Digital Outdoor (OOH) | High Growth | Nine's primary new growth sector (QMS). |
| Digital Subscriptions | +13% - 15% | Essential for margin stability (Stan, Nine Publishing). |
Source: Venture Insights analysis
Over the 1-2 year horizon, Nine’s "Nine2028" strategy aims to transform the company into a digitally powered media entity. The goal is for digital growth businesses to account for 60% of revenue by FY27, a significant increase from 45% in FY25. This transformation is expected to make Nine more resilient to industry disruption and capable of delivering sustainable value in a post-linear world.
A key medium-term driver will be the licensing of Nine's content for AI training. Nine has successfully started licensing its content to other Australian corporations for use in their proprietary Large Language Models (LLMs), a new revenue stream that leverages Nine’s journalistic archives.
Additionally, the expansion of 9Now and Stan Sport provides a scalable platform for future growth as more audiences transition to on-demand and streaming models. The company’s focus on leveraging first-party data across all platforms (including the new QMS digital screens) will be critical in defending margins against global digital giants.
Nine Entertainment’s performance for the six months ended 31 December 2025 demonstrates a company that has successfully navigated the "inflexion point" where digital growth consistently offsets the structural erosion of legacy print and broadcast assets. Despite a challenging macroeconomic environment that dampened television advertising revenues, Nine reported its second consecutive half of EBITDA growth, supported by a disciplined cost-reduction program and the burgeoning profitability of its subscription based digital platforms, Stan and Nine Publishing.
The headline figures for Nine Entertainment reflect a business in the midst of a deliberate transition. On an underlying basis - including continuing and discontinued operations but excluding the impact of the Domain divestment - Nine reported revenue of $1.14 billion and a Group EBITDA of $201 million, a 6% increase on the previous corresponding period (pcp).
On a continuing business basis, which treats the NBN and Darwin television operations as affiliates, revenue stood at $1.06 billion, down 5% pcp, while Group EBITDA rose 6% to $192 million. This margin expansion is a central theme of the H1 FY26 result, with the Group EBITDA margin improving from 16.3% to 18.3%.
| Financial Metrics | H1 FY26 (Continuing) | H1 FY25 (Restated) | Variance (%) |
|---|---|---|---|
| Group Revenue | $1,053.2 M | $1,105.5 M | (5%) |
| Group EBITDA | $192.2 M | $180.6 M | +6% |
| EBIT | $139.2 M | $130.0 M | +7% |
| NPAT (before Specific Items) | $95.2 M | $73.4 M | +30% |
| Statutory Net Profit | $81.4 M | $57.2 M | +42% |
| Earnings Per Share (EPS) | 6.0 cents | 4.6 cents | +30% |
| Net Cash / (Debt) | $157.8 M | ($451.3 M) | N/A |
Source: Nine results
The substantial lift in Net Profit After Tax (NPAT) of 30% to $95.2 million was driven by lower corporate costs, reduced interest expenses following the move to a net cash position, and the absence of one-off costs related to the Ben Roberts-Smith legal appeal that impacted the prior year. Specific items for the half totalled a post-tax expense of $13.7 million, including costs associated with the ongoing restructuring of the business.
The resilience of Nine’s earnings in a soft advertising market is primarily attributable to its subscription-based divisions. Total underlying subscription revenue grew by 13% during the half, a critical metric that highlights the company’s success in diversifying its income away from the cyclicality of advertising.
Stan remains the standout performer in Nine’s digital portfolio. Revenue for the streaming platform grew 15% to $282.7 million, while EBITDA surged 24% to a record $36.6 million. This growth occurred despite a period of high competition and the absence of the Paris Olympic Games content that featured in the pcp. The primary driver of this performance was Stan Sport, where average sport subscribers increased by 40% year-on-year, largely due to the investment in the Premier League rights.
| Financial Metrics | H1 FY26 | H1 FY25 | Variance (%) |
|---|---|---|---|
| Total Revenue | $282.7 M | $245.5 M | +15% |
| Costs - Stan Entertainment | $155.3 M | $156.5 M | (1%) |
| Costs - Stan Sport | $90.8 M | $59.6 M | +52% |
| Total EBITDA | $36.6 M | $29.4 M | +24% |
| EBITDA Margin | 12.9% | 12.0% | +0.9 pts |
| Paying Subscribers | ~2.4 M | ~2.3 M | +5% |
Source: Nine results
The strategic value of Stan’s entertainment content was reinforced by the launch of After The Dinner Party, a spinoff of the Married At First Sight (MAFS) franchise. The episode reportedly became Stan's highest-ever single-episode subscription driver in a 24-hour window, outperforming the global phenomenon Yellowstone. This demonstrates the power of Nine's "cross-platform" strategy, using a linear broadcast juggernaut to drive high-margin digital subscriptions. However, the 52% increase in Stan Sport costs to $90.8 million reflects the rising price of premium rights, a trend that requires continuous ARPU growth to maintain margin expansion. Stan’s overall ARPU is growing, suggesting that the platform still possesses pricing power in the Australian market.
Nine’s publishing division, encompassing The Sydney Morning Herald, The Age, and The Australian Financial Review (AFR), reported a 2% decline in total revenue to $262.2 million. However, digital revenue at the mastheads grew 9% to $136.9 million, more than offsetting the 7% decline in print revenue. Digital revenue now accounts for more than 50% of the group’s total revenue excluding Domain, Radio, and NBN.
The automotive brand Drive delivered an exceptional result, with digital revenue growth of 32% to $14.3 million. This was driven by a 120% jump in year-on-year marketplace revenue, as the brand continues to capitalise on its relaunch and the consolidation of CarAdvice under the Drive banner.
The Total Television division, which includes Channel 9, 9Now, and regional affiliates, faced a difficult comparable period given the absence of the Olympics revenue in H1 FY26. Revenue fell 14% to $508.2 million, but the division managed to deliver a flat EBITDA of $99 million on a continuing business basis. This was achieved through a significant $85 million reduction in costs compared to H1 FY25, of which $25 million represented underlying cost savings beyond the Olympics-related reduction.
While broadcast advertising was soft, Nine recorded an 8.2% increase in audiences in the key 25-54 demographic (excluding Olympics weeks), a momentum that accelerated in the December half. 9Now continues to be a critical growth pillar, capturing a 40.3% market share in the Total Television market as viewing continues to shift from linear to BVOD.
The next twelve months for Nine will be dominated by the integration of QMS Media and the finalisation of the Radio and Regional TV divestments. The primary challenge will be execution risk: Nine must prove to the advertising market that it can offer a truly "cross-platform" solution that includes digital OOH. Analysts will watch closely to see if Nine can maintain its Total Television momentum while integrating a major out-of-home player into its sales pitch.
Financially, the short term will see a temporary increase in Nine’s net leverage to approximately 1.8x on an FY26 pro-forma basis following the QMS payment. However, the cash tax loss benefits of $178 million, expected to be realised in January 2027, are projected to bring leverage back into the target range of 1.0x to 1.5x by the end of FY27.
Investors should also note the unfranked status of the 4.5 cent interim dividend. This is likely a result of the complex tax shielding strategy employed by the company to offset the Domain capital gain, which has temporarily exhausted Nine’s franking account balance.
The first half of FY26 represents a historic turning point for Southern Cross Media Group Limited (SXL). On January 7, 2026, the company completed its landmark merger with Seven West Media (SWM) via a Scheme of Arrangement. The resulting entity is a $2 billion revenue powerhouse spanning broadcast television, metro and regional radio, digital audio (LiSTNR), and West Australian publishing.
Because the results for H1 FY26 cover the period to December 31, 2025, they primarily reflect the standalone performances of SCA and SWM, with pro-forma consolidated data providing the first glimpse into the merged group's potential.
Over the 1-2 year horizon, the success of the SXL-SWM merger will be judged by its ability to drive "Total Media" revenue. The group aims to reach Australians "at scale" across national, regional, and local levels throughout the full day. This strategy is designed to offer a unique value proposition to advertisers who currently spend with global platforms like Meta or Google but lack the local connections and premium Australian content that the SXL portfolio provides.
The growth of LiSTNR is essential to this medium-term outlook. Management forecasts that Audio EBITDA will grow from $71 million in FY25 to $78-$83 million in FY26, with continued expansion into FY27. If LiSTNR can continue its trajectory of audience and revenue growth, it could become the group's most valuable digital asset. Together with 7plus growth this can potentially offset the continued structural decline of linear broadcast revenues. Additionally, the West Australian publishing brands are expected to play a "truly national" role in the group’s digital storytelling and advertising ecosystem.
On a pro-forma basis, assuming the merger had been in place for the entirety of the half-year, the group reported revenue of $1,008 million, a decline of 1.5% compared to the pcp. Pro-forma group EBITDA fell 14.5% to $106.9 million, reflecting the significant pressure on television advertising markets and the increased costs associated with renewed sports rights.
The pro-forma net debt of the merged entity was reduced by $16 million during the half to $338 million. This highlights a primary strategic priority for the new board: debt reduction. Consequently, SXL has declared no interim dividend for FY26, a decision aimed at strengthening the balance sheet and achieving a targeted leverage ratio of below 1.5x by FY27.
The half-year financial results for Nine Entertainment and Southern Cross Media illustrate two distinct but equally ambitious attempts to reinvent the Australian media conglomerate.
Nine Entertainment has utilised the proceeds from its highly successful Domain divestment to pivot into digital outdoor advertising and streaming, focusing on high-margin growth assets that already account for a significant portion of group revenue. Its restructuring is aimed at specialisation and operational efficiency, with a clear path toward a digital-majority revenue base by FY27.
Its primary challenge over the next 1-2 years is the successful integration of QMS and the continued defence of its television and publishing dominance.
Southern Cross Media has undertaken a more radical structural change through its merger with Seven West Media. By creating a unified national platform for television, radio, and digital content, SXL is betting that scale is the ultimate defence against global digital platforms.
While the immediate results are complicated by merger costs, leadership changes, and a weak TV market, the early signs of revenue synergies through LiSTNR and 7plus suggest that the strategy has merit. Its success depends on the delivery of $30 million in cost synergies, the reduction of debt, and the stabilisation of a management team capable of running a massive, diversified media engine.
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| Financial Metrics | Result | Change (pcp) |
|---|---|---|
| Group Revenue | $1,008.0 M | (1.5%) |
| Group Expenses | $901.2 M | +0.3% |
| Group EBITDA | $106.9 M | (14.5%) |
| NPAT | $34.7 M | (16.5%) |
| Net Debt | $338.2 M | (4.7%) |
| Leverage Ratio | 1.77x | N/A |
Source: SXL results
Southern Cross's standalone audio business (the pre-merger SCA assets) reported revenue of $216.5 million, up 3.2%. This was achieved despite a metro radio advertising market that declined by 7% during the period. Underlying Audio EBITDA grew by 28% to $40 million, indicating strong operational discipline.
| Financial Metrics | H1 FY26 | H1 FY25 | Variance (%) |
|---|---|---|---|
| Audio Revenue | $216.5 M | $209.7 M | +3.2% |
| Underlying Audio EBITDA | $40.1 M | $31.2 M | +28.2% |
| Digital Audio EBITDA | $2.8 M | $0.1 M | +nm |
| Metro Radio Revenue Share | 29.8% | 27.5% | +2.3 pts |
| LiSTNR Signed-up Users | 2.5 M | 2.2 M | +14% |
Source: SXL results
A major highlight was the performance of the digital audio platform, LiSTNR. After reaching EBITDA breakeven in FY25, LiSTNR contributed $2.8 million to EBITDA in H1 FY26. The platform’s ability to grow audiences and monetise engagement has been bolstered by its integration into Seven’s sports coverage. Between mid-December 2025 and mid-January 2026, LiSTNR added 70,000 signed-up users - three times its pre-merger run rate. This serves as the first proof-point for the "revenue synergies" promised by the merger.
The Seven West Media assets entered the merger with significant audience scale but facing intense revenue pressure. Seven’s total TV revenue fell 2.1% to $712 million, largely due to a decline in broadcast advertising revenue. However, Seven successfully mitigated the market decline by increasing its record TV revenue share to 44.1%.
The growth of the BVOD platform 7plus was exceptional, with revenue rising 15% to $98 million against a broader BVOD market that declined 2.7%. This was driven by a 26% increase in daily active users with a 62% jump in streaming minutes, fueled by premium live sports like the AFL and cricket. In Western Australia, The West Australian mastheads delivered a solid EBITDA of $14 million, down 5% pcp. Digital engagement for the publishing brands reached 5.7 million monthly users, a 27% year-on-year increase.
The next twelve months for SXL will be defined by "acceleration" of the merger strategy. The immediate goal is to stabilise the leadership team and begin realising the $30 million in cost synergies. The group has provided FY26 guidance for pro-forma EBITDA in the range of $200-$220 million, down slightly from the $233 million reported in FY25, reflecting the continued volatility in television advertising.
From a balance sheet perspective, the short term is focused entirely on debt reduction. With a current leverage of 1.77x, the company is prioritising cash flow over dividends to reach its target leverage of below 1.5x. Investors should expect ongoing restructuring costs as the group consolidates offices and streamlines back-of-house operations. The integration of 7plus and LiSTNR will also be a key focus, with the launch of new cross-platform products designed to capture a larger share of regional and national advertising briefs.