ASX Stocks
Nine Entertainment (ASX: NEC) Shares Slide 34% After Special Dividend Payout
Nine Entertainment (ASX: NEC) surprised investors as its share price opened 34% lower, a move primarily explained by its special dividend announcement.
On 9 May 2025, Nine confirmed the sale of its 60% stake in Domain to US property group CoStar for AUD $1.4 billion. From the proceeds, the company declared a special dividend of 49 cents per share, equating to AUD $780 million in total distribution.
This one-off dividend represents a direct capital return to shareholders, rather than funds being reinvested into acquisitions. While Nine has been linked with opportunities in radio and outdoor advertising, CEO Matt Stanton highlighted that the company will prioritise organic growth and selective investments going forward.
Why Did the Share Price Drop?
Many investors confuse a sharp price fall with a loss in value, but in the case of special dividends, the drop is expected.
When a company pays out dividends, the share price typically falls by the same amount on the ex-dividend date. This is because cash is leaving the company and going into investors’ accounts.
📌 For example:
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If a stock trades at AUD $2.00 and pays a 20-cent dividend, the price usually drops to AUD $1.80.
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Investors, however, still hold AUD $1.80 worth of stock plus 20 cents in cash, meaning the total value remains unchanged.
Thus, the 34% fall in Nine Entertainment’s share price reflects the payout of the special dividend, not a fundamental destruction of shareholder value.
Strong Revenue Growth from Stan and Digital Platforms
For FY25, Nine reported group revenue of AUD $2.68 billion, up 2% year-on-year, with strong momentum in digital businesses:
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Stan grew revenues by 10%, fueled by sports-driven subscriptions.
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Digital publishing revenues increased by 6%, supported by subscriptions and ad tech.
Together, Stan and digital segments now contribute nearly half of Nine’s group revenue, highlighting the company’s successful pivot toward digital-first growth.
For FY25, Nine reported group revenue of AUD $2.68 billion, up 2% year-on-year, with strong momentum in digital businesses:
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Stan grew revenues by 10%, fueled by sports-driven subscriptions.
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Digital publishing revenues increased by 6%, supported by subscriptions and ad tech.
Together, Stan and digital segments now contribute nearly half of Nine’s group revenue, highlighting the company’s successful pivot toward digital-first growth.
Profitability Trends – TV Weakness vs. Digital Strength
Despite revenue gains, profitability softened:
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EBITDA fell 6% to AUD $486 million (margin 18.2%).
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EBIT declined 9% to AUD $328 million.
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Net profit after minorities dropped 12% to AUD $166 million.
Segment insights:
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Publishing margins rose to 29% thanks to digital subscriptions.
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Stan improved margins to 12%, benefiting from subscriber growth.
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Television margins shrank to 13% as costs continued to rise.
This shows that while digital is scaling profitably, legacy TV remains under margin pressure.
Strategic Investments Driving Long-Term Growth
Nine is investing heavily in technology and digital platforms to strengthen future revenue streams:
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AUD 92m capex in FY25; FY26 spending projected at AUD 85–90m.
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Additional AUD 45–55m earmarked for AI, ad tech, and consumer platform development.
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Secured Premier League broadcast rights for Stan Sport.
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Introduced advertising on Stan, opening a new revenue channel.
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Advanced newsroom digitisation into a digital-first model.
Investor Takeaway
The 34% share price decline reflects accounting mechanics from the special dividend rather than operational weakness. In fact, Nine continues to show resilient digital revenue growth and a clear strategy to diversify beyond traditional TV.
While short-term profits dipped, Nine is investing aggressively in digital, tech, and sports rights, positioning itself for long-term growth in a competitive media landscape.