At time of writing, the share price of Nine Entertainment Co. Holdings Ltd [ASX:NEC] is up .86%, trading at $1.76 per share.
The stock has been battered over the preceding 12-month period:
Today the company announced the much anticipated sale of its Australian Community Media and Printing business (ACM) to a company lead by Anthony Catalano and Thorney Investment Group.
Sale funds to be used to pay down Nine Entertainment debt
With the sale set to be completed by 30 June 2019, Nine has signalled its intention to use the funds to pay down debt.
There’s a caveat though — the sale will be for just $115 million.
That’s less than a million dollars per masthead with ACM being an umbrella organisation for 160 newspapers.
In the announcement, the company noted that:
‘The cash proceeds of the sale are expected to be around $115m, subject to post-completion adjustments, of which $10m will be paid in 12 months. At this stage, it is intended that these funds will be used to reduce Group indebtedness. In addition, Nine will receive up to $10 million of advertising on ACM properties over the three years from completion.’
As part of the arrangement, the printing of Nine’s metropolitan publications which include The Age, The Sydney Morning Herald, and the Australian Financial Review, will be preserved for a ‘short transitional period’.
Nine CEO Hugh Marks said that:
‘The sale of ACM is aligned with our strategy to exit non-core businesses and to focus on Nine’s portfolio of high-growth, digital assets. We will retain a commercial relationship with ACM and look forward to continuing to work with the business in areas where there are mutual benefits to both Nine and ACM.’
Is the Nine Entertainment share price cheap now?
The Nine Entertainment share price has fallen off significantly of highs last year in the $2.50 range and its P/E ratio now sits at a more appealing 9.3.
The company is trying to turn things around by moving away from traditional media like newspapers.
As a whole, the media environment is only going to become more competitive in the digital age.
Disney has recently announced that it will be launching a streaming service and Foxtel’s woes have been well documented.
For Money Morning