Australian Radio Network (ARN) CEO Ciaran Davis has promised to “identify and deliver further efficiencies across the business” as the radio company reported a 22% decline in net profits after tax to $29.5m, alongside a 23% jump in net debt to $75m.
In its full year results released this morning, revenue was also back 1% to $334m and earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell 13% to $71.6m. Digital revenues grew 36% to $19.8m, but digital audio was still back 27%. Davis said he is “very confident in establishing the digital business on a breakeven run-rate in the fourth quarter of 2024.”
Chair Hamish McLennan noted that ARN’s operational performance was “strong” in the context of a difficult ad spend market, slowing economy, and shrinking government spend, all of which impacted revenues.
“While current economic conditions are challenging, ARN is the most well-run audio business in Australia and we are taking a number of steps to improve performance,” he said. “Permanent annualised savings of more than $10 million over the next two years have been identified, with $6.5 million to be realised in 2024.”
The radio company has also recommitted to its takeover of competitor Southern Cross Austero, flagging that it hopes to execute a binding transaction next month. McLennan said the proposed purchase “represents a unique opportunity for ARN to create a focused metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide, and Perth, plus a larger, growing, and profitable regional radio footprint of 88 stations.”
ARN partnered with investment firm Anchorage Capital Partners to form a consortium to bid for SCA. An Anchorage Capital Partners spokesperson added that it has been “actively participating in the due diligence process, believes the transaction remains compelling, and would deliver the foundation of a private, independent, and well-capitalised national media company owned by ACP.”
Last June, ARN invested 14.8% in SCA, which was funded by the $66.3m it received for the sale of a 25% interest in technology company Soprano Design. The remaining sale proceeds were put towards paying down debt.
Davis, who was paid $1.55m in 2023, with a base salary of $1.125m, also referenced ARN’s position as the #1 metro radio network in the country, and its contracts with Kyle and Jackie O, which now stretch until the end of 2034, and Christian O’Connell, who’s locked in until 2029. Davis likened these agreements to the “highly competitive sports rights deals that bring the certainty of audiences and commercial sponsors and incentivise and reward superior performance.”
ARN will pay a fully franked dividend of 3.6 cents per share, which brings the total dividends paid for 2023 to 7.1 cents per share. In 2022, it paid 10.2 cents per share.