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Stan Talks Up Future Under Merged Nine After Losing $30M

First it was Fetch TV CEO Scott Lorson talking up his numbers last week, then came Foxtel CEO Patrick Delany with his big 4K real time TV announcement, now Stan boss Mike Sneesby is adding his two bobs worth, talking up the strength of a merged Nine Entertainment and Fairfax Media.

Stan CEO Mike Sneesby. Image Fairfax Media

Talking to the AFR Sneesby claims that Stan has added over 100,000 new subscribers during the past two months and that that newly signed output deals, local productions, which are now attracting international heavyweights will give Stan an edge. The only problem is that he has not identified how the local streaming service which is currently losing $30M a year will deliver a profit despite Stan revenues now topping $100 million.

Formed in August 2014 as a venture between Nine and Fairfax, publisher of the Financial Review, Stan has been playing catch up to both Fetch and Foxtel with analysts tipping that Stan will find it hard to make a profit based on the content available to them and new competition from Amazon, CBS and Disney in the future.

“With Nine and Fairfax merged, meaning we’ll have Australia’s biggest media company as our single shareholder, we are better positioned than ever to look at broader strategic opportunities for Stan,” Mr Sneesby said.

He also made no mention of moves by Amazon, Apple and Google to grow content streaming share in Australia delivering new competition for Stan.

Scott Lorson the CEO of Fetch admits that the International players including Disney and Amazon are “playing a long game” in Australia and that in the future they will go after streaming market share in Australia.

Analysts told ChannelNews that Walt Disney’s $71 billion purchase of the News Corporation owned Twenty-First Century assets gives the combined entity control of a greater share of popular movies and programming which are going to make them a major global player. The issue is will they go it alone in Australia or partner with the likes of Foxtel which is 63% owned by News Corp.

“It is our strongest period of growth that we’ve ever had in the business and our strongest start to a fiscal year that we’ve had in the history of the business,” Sneesby said.

“The strength of our important output partnerships with Showtime, Starz and MGM are really driving the growth in our business, and we’re delighted we’ve entered into these arrangements because they’re all paying off very quickly. The business has gone from zero to being a household name in Australia in three and a half years.”

The business is also banking on their partnerships with Hollywood studios, and CBS’ Showtime however this could come under pressure with CBS the new owners of the Ten Network tipped to launch their own streaming service in Australia in direct competition with Stan.

According to ChannelNews sources CBS is currently looking at a standalone service in Australia having already ruled out buying equity in a local player.

Stan currently has content deals with Lionsgate’s Starz and Metro Goldwyn Mayer (MGM), as well as a mix of its own locally produced content, which is now attracting international partnerships, such new productions Bloom, in partnership with Sony Television Pictures, and The Gloaming, in partnership with Disney’s ABC.

The $4.2 billion Nine merger which will bring together free-to-air television, radio, print and digital publishing. The company will also house Stan and a 60 per cent stake in Domain, which are seen as key drivers behind the merger. The partnership with Stan over the last four years meant Nine and Fairfax executives had a strong and successful working relationship.

Should the deal obtain regulatory and shareholder approval, the merged entity, to be called Nine, will own 100 per cent of Stan.

“With Nine and Fairfax merged, meaning we’ll have Australia’s biggest media company as our single shareholder, we are better positioned than ever to look at broader strategic opportunities for Stan,” Mr Sneesby said.

Sneesby said that it was too early to say what those opportunities look like, but he stressed Stan could act fast should something present itself.

“I think the timing of the transaction is perfect for us as well. We’ve had phenomenal growth, but as we begin to grow, and those strategic opportunities open up for us, we also need to be in a position to be able to assess them and act on them, and I think we are in a better position than ever to do that,” he said.

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