Dean Paatsch, founder of Ownership Matters, which advises institutional investors, said buybacks were a double-edged sword for companies’ management teams. “You buy back your shares, and something happens, and your share price falls, you look like a fool,” he said. “You buy them back, and your share price rises, you look like a genius.”

Buybacks are typically popular among investors because they lower the number of shares outstanding and thus boost a company’s earnings per share.

“We love buybacks because it shows confidence in the company,” said Oscar Oberg, lead portfolio manager at Wilson Asset Management, which is not a Nine shareholder. “A buyback essentially reduces your shares on issue, which means your earnings per share increase.

“Theoretically, your share price should increase, but it all depends on what valuation the market is willing to put on that company. Management teams and boards are incentivised for the earnings per share to grow, and ultimately, the share price.”

A buyback also increases the existing shareholders’ ownership of a company. Nine has a substantial investor in the family of media mogul Bruce Gordon. His private investment group, Birketu, has a 14.95 per cent stake in the company, and indirectly has a further 10.15 per cent in cash-settled equity swaps held by Macquarie, giving it an overall stake of 25 per cent.

Nine’s board has yet to determine if it will extend the buyback for a third year beyond its expiry next month.

Not everyone agrees that buybacks are an efficient use of a company’s capital. Christine Brown, emeritus professor at Monash University’s business school, said a view, particularly among economists, was that rather than undertaking buybacks, management teams should be investing in their companies, in projects and employees to grow and add value in ways that benefit not only the organisation, but the broader economy.

Nine has invested $305 million in securing the Olympic broadcast rights until, and including, the games in Brisbane in 2032.

Buybacks also spark debate about which shareholders benefit most – the ones who sell into the share repurchase scheme, or the ones who remain. “Long-run studies in the US show that companies that do buybacks in the long term underperform,” said Brown, who has done extensive research on buybacks.

While buybacks are a legitimate capital management tool, there is often a perception that they are undertaken by companies when they “run out of ideas for investment opportunities”, said Brown.

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Goldman Sachs has forecast that Nine will report full-year earnings before interest tax and depreciation of $509 million, compared with $591 million the previous year. It has a “buy” recommendation on the stock with a share price target of $1.90.

Goldman’s media analyst Kane Hannan wrote in a report that despite the uncertain global economic outlook, Nine was well positioned to offset the decline in the advertising market “with its high-quality suite of digital assets”, “strong cost performance”, and attractive valuation given the recent share price weakness.