Is Nine Entertainment Co. Holdings (ASX:NEC) a Sell or a Strategic Buy in a Shifting Media Landscape?

The Australian television advertising market is at a crossroads. While the sector faces structural declines in linear TV revenue, it is simultaneously witnessing a surge in Connected TV (CTV) advertising, which is projected to account for 23.9% of all video ad spend by 2026, valued at $46.3 billion [2]. For Nine Entertainment Co. (ASX:NEC), this duality presents both existential risks and strategic opportunities.

Strategic Risks: Structural Decline and Competitive Pressures

Nine’s core television advertising business is under pressure from two fronts. First, traditional linear TV advertising revenue is shrinking. Regional TV ad spend fell 3.2% in 2025, reflecting broader industry struggles to retain advertisers amid shifting viewer habits [1]. Competitors like Seven West Media have already suffered, with a 40% drop in half-yearly profits due to a “soft TV advertising market” [1]. Second, the rise of digital platforms is accelerating. Over three-quarters of Australian ad spend now resides in digital channels, with advertisers prioritizing performance-driven outcomes over the broad reach of linear TV [2].

Nine’s recent 8% growth in TV advertising revenue for the March quarter was partly driven by a temporary spike in election-related spending, but the company has acknowledged “market uncertainty” ahead [5]. Analysts warn that free-to-air TV advertising is in structural decline, urging Nine to diversify into areas like outdoor media to offset losses [1].

Strategic Opportunities: CTV and Digital Innovation

Despite these challenges, Nine is not without options. The company has invested in its BVOD platform, 9Now, and expanded into digital content with offerings like Stan Sport and the Good Food app [5]. These moves align with the growing demand for on-demand and personalized advertising, a space where CTV excels. Advertisers are increasingly drawn to CTV’s capabilities for targeted messaging and real-time performance metrics, which mirror digital platforms [2].

Moreover, the broader Australian advertising market is expected to grow to $27.4 billion by 2033, driven by digital transformation and e-commerce [3]. Nine’s focus on data-driven advertising and partnerships with platforms like Amazon’s DSP could unlock new revenue streams, though questions remain about retaining control and value [3].

Risk Assessment: A Tenuous Balance

Nine’s ability to navigate this transition hinges on its capacity to innovate while managing legacy costs. The company’s recent sale of Domain and focus on digital content suggest a recognition of the need to adapt. However, its reliance on traditional TV advertising remains a vulnerability. For instance, commercial free-to-air networks have drastically reduced spending on local drama and children’s content, with Australian adult drama investments falling to $48.5 million in 2023-2024 from $95.7 million five years earlier [4]. This trend risks eroding the cultural and commercial value of its content library.

Conclusion: A Strategic Buy with Caveats

Nine Entertainment Co. is neither a clear sell nor a guaranteed buy. The company’s strategic investments in CTV and digital content position it to capitalize on the $46.3 billion CTV market by 2026 [2]. However, its continued dependence on a declining linear TV model and the competitive pressures from digital-first platforms pose significant risks. For investors, the key question is whether Nine can execute its digital transformation quickly enough to offset structural declines. If it succeeds, the company could emerge as a leader in Australia’s evolving media landscape. If not, it may struggle to remain relevant.

Source:
[1] Television Advertising Trends [https://www.mediaprecinct.com.au/single-post/television-advertising-trends]
[2] Long Read: The CTV surge is coming in 2025 [https://www.adnews.com.au/news/long-read-the-ctv-surge-is-coming-in-2025]
[3] Australia Advertising Market Forecast & Outlook 2033 [https://www.imarcgroup.com/australia-advertising-market]
[4] Alarming new stats reveal the sad state of Aussie TV [https://www.smh.com.au/culture/tv-and-radio/out-for-the-punch-commercial-tv-networks-halve-drama-spend-in-five-years-20250526-p5m2at.html]