Purchase of Nine Entertainment Co (ASX: NEC)

Across the Australian Equity component of investor accounts we have bought Nine Entertainment Co. (ASX: NEC).

Nine is a leading Australian media conglomerate that was founded by the Packer family. It owns: 

· The Nine Television Network
· A portfolio of newspapers that includes The Age and the AFR
· A commercial radio network
· The subscription TV provider Stan
· A 59% stake in Domain

We are positive on the long-term outlook for NEC for the following reasons:
· Dominant market position
· Strong operational performance
· Robust balance sheet with strong cash flow and low deb

Nine has two key levers for value creation that we would like to highlight. 

Firstly, the evolution of the TV business: 
People are watching less free-to-air TV and more content through digital channels. Nine has ridden this wave of change well, by continuing to produce market leading content that can attract strong audiences across a range of screens.

The second key value driver is built on the Domain offering:
Domain are currently building out the business in two ways. The first is increased penetration of higher value listings that put the seller’s property at or closer to the top of the list. The second is building out the agent services to help them manage and improve their businesses. Over time we expect this to drive earnings growth. 

We think it is suited to the portfolio because of its strong cash flow and attractive dividend yield. 

The purchase of Nine Entertainment Co. has been funded through the sale of WiseTech.

If you have any questions or would like more information, please contact your adviser.

Warnings and disclosures
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