Nine is still not the one in TV battle

Nine Entertainment's prospectus, to be officially launched on Monday, will show its first-half earnings will grow at a faster rate than the second half, but full-year television profit will still come in at about $80 million less than the equivalent projected earnings from its rival Seven.

The detailed projections will allow investors to make reasonably accurate performance comparisons between Seven and Nine. Nine's current share of advertising revenue is about 2.5 percentage points less than Seven.

Nine's margins, which have been running at about 18 per cent, are forecast to be at more than 20 per cent in the prospectus, which will also suggest that its cost base remains higher. About $700 million worth of shares are expected to be sold in the initial public offering, making it Australia's largest float since 2010.

Nine is expected to sell about $275 million in newly issued shares to pay down debt to about $600 million. The rest of the shares up for sale will be sourced from current shareholders who took ownership of Nine in February after swapping their debt for equity in the company.

Current investors were given an indicative price range of $2.05 to $2.30 for their shares, which will be reflected in the pricing of the IPO.

At this price, Nine will have a market value of about $2 billion when it lists next month, or an enterprise value of $2.6 billion including debt.

The February restructure effectively valued Nine at $2.3 billion, based on forecasts at that time of $250 million in earnings before interest, tax depreciation and amortisation (EBITDA) for the 2012-13 financial year, a multiple of 9.2 times earnings.

Nine is expecting EBITDA to rise to about $300 million this year, with $235 million to $240 million of this generated by its television business, boosted by the acquisitions of Nine Adelaide and Perth.

Despite a pick-up in consumer confidence, and the recent federal election, media executives have reported little sign of a turnaround in the industry with advertising sales continuing to be short.

Insiders have said Oaktree Capital Group, one of Nine's largest investors, will sell almost half of its 26 per cent stake, while Apollo Global Management plans to initially keep its 28 per cent stake.

The IPO will not provide the first pay day for Nine's owners.

The day the restructure was approved by the courts early this year $700 million worth of debt was raised, with $570 million paid straight out to investors.