ARN Media disappointed the market with the release of its first half figures this week.
Shares traded at .68c on the day before the results release. After the results, which saw profit slip, the shares traded at .59c and closed at 62c. Not that we are about to read too much into small day-to-day market movements.
Like many media stocks, they are trading well below year highs, which is this case, was just over a dollar early in 2024.
See also: ARN Media reports modest revenue growth, but profit dips 19% to $10m
It could have been worse wads how one observer tried to put a spin on the results. ARN Media chief executive Ciaran Davis has set the bar high in previous years. By those standards, this was a poor result.
Most interest at the broadcaster this year was the ambitious launch of The Kyle and Jackie O Show into Melbourne. Davis explains below the show is on track. Not everybody is on board though. We reported earlier this week how Australia’s biggest-selling newspaper opined “Melbourne deserves better”.
See also: What’s wrong with Kyle and Jackie O? Has Melbourne invasion gone down the toilet?
Jonesy and Amanda with Ciaran Davis
ARN fighting in ‘smaller pool of ad dollars’
“A competitive result in what is a challenging market,” is how Davis put it to Mediaweek.
“In a market where we’re all competing from a smaller pool of advertising dollars, and I don’t just mean radio operators, we’re competing against other media, radio is still performing reasonably well compared to some other sectors.
“We’re starting to see the fruits of the labour come through around digital audio and the acquisition that we made in a regional broadcaster, which is now starting to get material growth coming through.”
Davis was referring to iHeartRadio and the 2021 $300m+ Grant Radio acquisition.
As to how ARN might turn things around in the back half of calendar 2024, Davis said: “[We are] very focused on audience delivery and the content teams are working hard on that. Our sales guys are doing a great job in terms of responding to briefs in a very short period of time. There’s pressure on CPMs, which you would expect in an environment like this.
“The ideas that we’re bringing back to clients are being well received. It’s maintaining that level of high service that we’re already delivering and good content into the back half as well. The feedback we’re getting from contract clients is OK. Also the level of briefs we’re seeing is good.
“We are looking at the operational side of the business and seeing if there are other ways we can pull out more efficiencies.”
As to some of the upbeat ad spend forecasts being released, Davis said they seem to be a little high and there is no sign from those sort of increases in the market yet.
Industry consolidation
Pushing for ARN expansion via acquiring the Triple M network has proven to be an expensive undertaking. It cost ARN $4.5m according to Davis. The amount is exaggerated by the fact the plan failed, so far. It also looks high when the profit for the period is $10m.
Davis wouldn’t be drawn on is there still a deal to be done? However, he sounded like he thinks it might eventuate.
“We’re still strong advocates on the merits of the [SCA] deal. We’re still strong advocates on the need for consolidation.”
But he also added he was focused now on what he labelled as “business as usual” which means keeping Gold 104.3 and WSFM.
ARN CEO Ciaran Davis and chief content officer Duncan Campbell with Kyle and Jackie O
Has Kyle and Jackie O’s raunch misjudged Melbourne?
Audiences in Sydney, and those that listen in other markets on demand, don’t seem to have a problem with the explicit content featured usually in the first hour of Kyle and Jackie O. But are those in Melbourne, and maybe some advertisers, resisting it?
The listeners: Davis said, “Kyle and Jackie have a very large following, have done for over 15 years. I think they’re straightforward. Their unscripted style is what makes them successful.
“We’re not looking to change a winning formula. Nor are we trying to sort of create a Melbourne-focused show or a Sydney-focused show. It’s content that’s universal in appeal.
“We’re happy with the progress to date in the Melbourne market. We didn’t expect in our business planning that it would go number one. They’re not as well-known down there.
“They’ve had 14 years of consistent number ones and broadcasting in Sydney.
“The expectation of many other people was that it would [#1] be and that it would do what it did when it came to KIIS, when it left 2Day FM back in 2013. That’s a different scenario because they were well known at a loyal base on 2Day, who did transfer with them.
“Listening to radio is habitual. We know that. We know that to change habits takes time, takes marketing, takes good content. That’s in our business plan and we’re quite happy with it.”
The advertisers: “Our clients know they get excellent results when they advertise with us. They know it’s a unique product. We’re not looking to dilute that. If a client ever has concerns, we’re happy to discuss and look at solutions. And again, they know the results that it delivers for them.”
Digital revenues into positive territory
The iHeartRadio digital and podcast play reported its smallest loss ever in a six month period – $1.9m. Davis added: “June was a very good month. And it was both EBITDA and cash flow positive in June. [iHeartRadio] will be EBITDA and cash flow positive for quarter four and in 2025.”