Bell sounds for Nine, but price is not quite right

It wasn't quite a champagne launch but the bubbly still flowed at the sharemarket debut of Nine Entertainment as current affairs star Liz Hayes rang the bell on a new era of public ownership for the TV network.

Nine Entertainment shares opened at $2.02 on the Australian Securities Exchange, below their $2.05 issue price but chief executive David Gyngell made no comment on the pricing as he welcomed the company's new shareholders with a friendly warning that he "looked forward to the ups and downs" and would not sugar-coat the realities of doing business.

"That's the way we run our business at Channel Nine - often wrong but never in doubt," Mr Gyngell said, to laughter from the crowd of Nine Entertainment staff and investors. "You'll never hear us sugar-coat it."

Mr Gyngell described the float process as "satisfying", saying in a statement that the share offer had been oversubscribed.

"We welcome both domestic and international investors and look forward to their long term investment in our business," he said.

Nine's float values the company at $1.93 billion and has raised $636 million, with $395 million flowing to the company's private owners including two US hedge funds that retain stakes.

A further $199 million goes to paying down debt while the company will receive $50 million in cash.

Mr Gyngell will be paid $2 million a year and, under the terms of the float, received about 4.5 million shares, worth $9.3 million at the issue price.

He also received a cash bonus of $2.5 million for taking the company to listing and an additional $4.5 million worth of performance rights.

Nine Entertainment shares closed 7¢ down on the issue price at $1.98 on heavy volume with 47 million shares traded.

BBY analyst Mark McDonnell said the first few hours of trading should not be seen as indicative of where the share price might go.

The shares came on at the low end of the $2.05 to $2.35 range indicated during the offer and were "fairly priced", Mr McDonnell said.

The challenge for Nine will be to achieve its 38.4 per cent ad revenue market share goals against a strengthened Channel Ten.

Ten has billionaire shareholders Lachlan Murdoch, James Packer and Bruce Gordon backing a $200 million loan for the network and has secured rights to the Twenty20 cricket.

"Nine has a fantastic franchise in cricket through the summer and Ten is going to nibble away at that," Mr McDonnell said.

Peter Esho, chief market analyst at Invast Financial Services, said investors would do well to avoid the first few days of trade to better gauge the market.

"It's probably not wise to write a check immediately," he said.

"Wait a few weeks and see what happens then."

The Nine public offering valued the company at about 8.3 times estimated earnings before interest, tax, depreciation and amortisation for the 12 months through to June next year, including debt, compared with 7.5 times for larger broadcaster Seven West Media.

The raising comes amid a rush of public offerings in Australia, where the value of offerings announced last month was $3.2 billion, more than the previous 22 months combined, according to data compiled by Bloomberg.

The success of US hedge funds Apollo and Oaktree in listing Nine contrasts with CVC Capital Partners, which purchased the broadcaster from billionaire James Packer seven years ago and lost most of its investment when it handed control to lenders in October last year.