Latest / What the Flux / Nine's share buyback doesn't go to plan | Airbnb shares drop 13% | Warner Brothers' pay-TV battle

Transcript

Nine's share buyback doesn't go to plan | Airbnb shares drop 13% | Warner Brothers' pay-TV battle · What the Flux

• 0:05
  Speaker 1: This is the Blacks.
• 0:06
  Speaker 2: I'm Brettan, I'm justin and it's Friday, the ninth of August.
• 0:09
  Speaker 2: Juzzy Boy.
• 0:10
  Speaker 1: Online betting agencies are shaking in their betting booties. The
• 0:13
  Speaker 1: government is exploring new crackdowns on gambling ads on TV, before, during,
• 0:18
  Speaker 1: and after live sport, and experts reckon. If these changes
• 0:22
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• 0:25
  Speaker 1: four billion dollars.
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  Speaker 2: the Flux app and turn your notifications on.
• 0:45
  Speaker 1: Three revolutionary stories today. Juzzy boy, let's do it for
• 0:48
  Speaker 1: our first. Nine Entertainment is expected to wrap up its
• 0:52
  Speaker 1: two year share buyback after a whack in profits and
• 0:56
  Speaker 1: business performance.
• 0:57
  Speaker 2: Not ideal to be buying back shares when your revenue
• 0:59
  Speaker 2: is on the way down, So tell me all, okay.
• 1:01
  Speaker 1: Nine Entertainment is the Aussie media company with the whole
• 1:04
  Speaker 1: range of media.
• 1:06
  Speaker 2: We're talking TV like Channel nine, radio like three W.
• 1:09
  Speaker 1: And two GB, and then there's also publications like The
• 1:12
  Speaker 1: Australian Financial Review, The Age, the Sydney Morning Herald.
• 1:15
  Speaker 2: Now an two years ago, Nine Entertainment announced it would
• 1:17
  Speaker 2: start a share buyback plan where it would buy back
• 1:20
  Speaker 2: up to ten percent of its stock.
• 1:22
  Speaker 1: Now at the time this was considered quite a signal
• 1:25
  Speaker 1: of strength.
• 1:26
  Speaker 2: But now, after two hundred and twenty million bucks in
• 1:28
  Speaker 2: share buybacks, nine has announced that it will finish buying
• 1:31
  Speaker 2: back its own shares.
• 1:32
  Speaker 1: Okay, interesting, juzzy boy, Yeah, why is this all happening
• 1:35
  Speaker 1: right now?
• 1:35
  Speaker 2: Well, be man Nine's been struggling with a weaker ad market,
• 1:38
  Speaker 2: it's lost the media bargaining deal with Meta, and it's
• 1:41
  Speaker 2: laying off over two hundred of their staff.
• 1:43
  Speaker 1: So the buyback may not be the best use of
• 1:45
  Speaker 1: its cash right now.
• 1:47
  Speaker 2: So what is the key learning here?
• 1:48
  Speaker 1: Share buybacks can be a double edged sword for companies.
• 1:51
  Speaker 1: On the one hand, they sent a very strong signal
• 1:54
  Speaker 1: to the market. We are so confident in our business
• 1:57
  Speaker 1: that we see in no better way to spend our
• 1:59
  Speaker 1: money than to buy more of our very own shares.
• 2:01
  Speaker 2: And share buy backs typically also result in a higher
• 2:04
  Speaker 2: share price for the company.
• 2:05
  Speaker 1: Yep. That's because when the company buys back shares, it
• 2:08
  Speaker 1: lowers the number of shares available on the market, and
• 2:10
  Speaker 1: as a result.
• 2:11
  Speaker 2: It boosts the company's earnings per share.
• 2:13
  Speaker 1: But on the other hand, Juzzy boy, share buybacks can
• 2:15
  Speaker 1: be a big disaster in some cases.
• 2:18
  Speaker 2: For some investors, they see a share buy back as
• 2:20
  Speaker 2: a signal that a company's run out of other investment opportunities.
• 2:23
  Speaker 1: But even bigger disaster is when you buy back your
• 2:26
  Speaker 1: shares and the share price falls. And in Nine's case,
• 2:29
  Speaker 1: its share price has dropped thirty seven percent over the
• 2:31
  Speaker 1: last year.
• 2:32
  Speaker 2: So rather than continuing to invest in a falling company,
• 2:35
  Speaker 2: Nine decided to put a pause on the.
• 2:37
  Speaker 1: Buy back because maybe there are now better internal investments
• 2:40
  Speaker 1: to be made to get Nine back on track. For
• 2:43
  Speaker 1: our second story, Airbnb has had its largest share price
• 2:46
  Speaker 1: drop since going public in twenty twenty. That post pandemic
• 2:50
  Speaker 1: holiday revenge really starting to slow down. Juzzy boy, what's
• 2:53
  Speaker 1: going on here?
• 2:53
  Speaker 2: When airbb launched back in two thousand and eight, was
• 2:55
  Speaker 2: considered a bit of a zany idea to let someone
• 2:57
  Speaker 2: sleep in your spare room or your house while you're away.
• 3:00
  Speaker 1: But it's crazy how fifteen odd years later everything can change.
• 3:03
  Speaker 2: Yep, Because now Airbnb has over one hundred and fifty
• 3:05
  Speaker 2: million worldwide users.
• 3:07
  Speaker 1: Who have booked more than one point five billion stays.
• 3:10
  Speaker 1: If you don't mind, but.
• 3:11
  Speaker 2: Be man, it seems like those stays are slowing down
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  Speaker 2: real fast for Airbnb. Yep.
• 3:15
  Speaker 1: While Airbnb announced that its bookings increased eight point seven
• 3:18
  Speaker 1: percent in the second quarter, it was well below Airbnb's
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  Speaker 1: growth forecasts.
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  Speaker 2: Particularly during this summer period in the US and Europe.
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  Speaker 1: So Airbnb share price dropped more than thirteen percent, which,
• 3:28
  Speaker 1: as it happens jusey Boy, is the largest drop since
• 3:31
  Speaker 1: enlisted in twenty twenty.
• 3:32
  Speaker 2: Avebman. Some companies have an off quarter, but Airbnb has
• 3:35
  Speaker 2: had three off quarters in a row and now be man.
• 3:38
  Speaker 2: Rather than underperforming again, Airbnb's warned investors of sequential moderation
• 3:43
  Speaker 2: for the next quarter.
• 3:44
  Speaker 1: In other words, just calm your farm and keep your
• 3:47
  Speaker 1: expectations in check Wall Street, but be man.
• 3:50
  Speaker 2: The biggest red flag airbb's marketing spend will outpace its
• 3:53
  Speaker 2: revenue in the next quarter.
• 3:54
  Speaker 1: Not what you want to hear in a slowing market.
• 3:57
  Speaker 1: So what is the key learning here? Marketing spend just
• 4:00
  Speaker 1: be another cost. It needs to be an investment with
• 4:03
  Speaker 1: a strong return, you see, b Man.
• 4:04
  Speaker 2: Airbnb's always promoted the fact that the majority of its
• 4:06
  Speaker 2: traffic is direct. We're talking ninety percent of their traffic
• 4:10
  Speaker 2: comes from unpaid channels.
• 4:11
  Speaker 1: And the reason, well, Airbnb CEO claims it's because of
• 4:14
  Speaker 1: its brand strength.
• 4:15
  Speaker 2: In fact, Airbnb spend just over eighteen percent of its
• 4:18
  Speaker 2: revenue on marketing in twenty twenty three.
• 4:20
  Speaker 1: But boy, in the upcoming quarter, Airbnb now expects its
• 4:23
  Speaker 1: marketing expenses to grow faster than revenue.
• 4:25
  Speaker 2: And increasing marketing spend at a time when demand is
• 4:28
  Speaker 2: softening could be a major red flag for investors. For
• 4:31
  Speaker 2: our third and final story, Warner Brothers Discovery has written
• 4:35
  Speaker 2: down the value of all its TV assets over nine
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  Speaker 2: billion US dollars and that led them to a ten
• 4:40
  Speaker 2: billion US dollar loss for the.
• 4:41
  Speaker 1: Quarter Yaikaruni's Juzzy Boy. After losing the NBA broadcast deal
• 4:45
  Speaker 1: this year, this just can't be good for Warner Bros.
• 4:48
  Speaker 1: So what is the story right here?
• 4:49
  Speaker 2: Okay? Warner Brothers is the entertainment giant that was founded
• 4:52
  Speaker 2: back in nineteen twenty three.
• 4:54
  Speaker 1: It's the name behind iconic movies like the Harry Potter series,
• 4:57
  Speaker 1: Dark Knight, The Matrix, and b Man.
• 4:59
  Speaker 2: In twenty two twenty two, Warner Brothers merge with Discovery Channel,
• 5:02
  Speaker 2: added subsidiary channels in a forty three billion US dollar
• 5:06
  Speaker 2: whopper deal, and now Warner Brothers Discovery has written down
• 5:09
  Speaker 2: its PayTV business by a woppin' nine point one billion
• 5:12
  Speaker 2: US dollery dues. Yep, surprise, surprise. They say that they
• 5:15
  Speaker 2: cable channels just aren't worth what they used to be
• 5:18
  Speaker 2: in this uncertain PATV.
• 5:20
  Speaker 1: Market, And as it happens, juzzy boy, this news sent
• 5:22
  Speaker 1: Warner brother Discovery share price down eleven percent, wow.
• 5:25
  Speaker 2: To its lowest share price since these two companies merged.
• 5:28
  Speaker 1: Sounds like this merger hasn't quite panned out the way
• 5:31
  Speaker 1: these two media companies had hoped.
• 5:33
  Speaker 2: So what is the key learning here?
• 5:34
  Speaker 1: Even the most well planned mergers have a chance of
• 5:37
  Speaker 1: not reaching their potential see man.
• 5:39
  Speaker 2: Since Warner Brothers merge with Discovery Channel, the audience size
• 5:42
  Speaker 2: of PATV channels has only gotten smaller.
• 5:44
  Speaker 1: They're on top of that a mountain of debt softening
• 5:46
  Speaker 1: AD market layoffs at the company last month, and.
• 5:48
  Speaker 2: It's pretty clear that Warner Broy's merger with Discovery Channel
• 5:51
  Speaker 2: isn't quite panning out as they'd hope.
• 5:53
  Speaker 1: And Jesseyboy, this isn't as uncommon as you might think.
• 5:56
  Speaker 2: In fact, according to the Harvard Business Review, some mergers
• 5:58
  Speaker 2: actually have a seventy two percent chance of failure.
• 6:01
  Speaker 1: But you can dramatically increase the odds of success if.
• 6:03
  Speaker 2: You understand the select targets, understand how much to pay
• 6:07
  Speaker 2: them and how much to integrate them as well.
• 6:09
  Speaker 1: So it's not too surprising that Warner Brothers Discovery has
• 6:11
  Speaker 1: been considering a breakup and splitting its streaming and its
• 6:14
  Speaker 1: studio business from its old TV networks black Lam.
• 6:18
  Speaker 2: If you want to test your business knowledge as well
• 6:20
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• 6:22
  Speaker 2: there is only one place to be. It is in
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  Speaker 2: the Flux app playing quick Sticks Today. You receive a
• 6:26
  Speaker 2: notification at a random time of the day, and the
• 6:28
  Speaker 2: first person to answer correctly win's the fifty bucks.
• 6:30
  Speaker 1: Thanks for listening, and we'll see you on Monday.