Nine Entertainment Benefits as Competitor Ten Fails to Connect With Audiences

We reinforce our view on Nine Entertainment Co. Holdings and retain our fair value estimate of AUD 2.10, with the stock price trading marginally above this. Nine is on track to capture a 40% share of metro market television advertising revenues for 2014 to closely match rival Seven, while Ten has failed to connect with audiences as its share of spend dwindles towards 20%. The introduction of digital channels increased the commercial platforms from three to nine. Nine and Seven have brought to the market differentiated channels, diluting the relevance of content from Ten. Our forecasts reflect our view that Ten will remain a weak third player, with Nine and Seven retaining a combined 80% share of television advertising expenditure.