A tough year for the media didn’t miss Southern Cross Austereo (SCA). A challenged ad market and costs associated with the ARN/Anchorage Capital bid cut into the profit.
The metro and regional radio giant SCA released its full-year results this week.
CEO John Kelly was up and about during the earnings call and that positivity carried through into his results day media interviews.
“The story today is about the outlook and about the momentum that we have in the second half [of FY24] and into FY25,” Kelly told Mediaweek. “That’s the absolute story.
“We’ve guided that we’re going to be lower on our cost base next year. Our capex has reduced to $10m from $15m. We’re very excited about the future.”
The positive outlook gathered pace around the time the ARN/Anchorage Capital Triple M bid faltered.
“From about May onwards, there was a big sigh and let’s get on with business attitude. The one thing those sort of near-death moments do is really galvanise the leadership team, the management team and the entire 1500-strong workforce across our 50 markets.”
SCA: Getting TV of the books
SCA has tried to divest its regional TV business before without luck. It’s trying again. This time Kelly speaks like he’s got a deal almost sorted. He mentioned being able to find a buyer “in the short term”.
“We want to find the right home for those assets and for our people who work on those assets.”
As to what might happen to any proceeds from a sale, Kelly said: “We’ll finalise the process first and then we’ll also consult with our shareholders in the coming days as to their views.”
SCA as a pure audio play
Kelly: “If we become just an audio company, we’ve got the best metro share in 20-54s. We reach 70% of Australians with our original audio assets. Our digital audio revenues are $35 million and growing at 57% compared to ARN’s $22 million growing at 25%.”
SCA’s new confident swagger has been evident in everything from recent SCA programming moves, to revitalised promotions activity through to this week’s results presentation.
As the financials showed this week, it also coincided with SCA revenue share improvement.
Kelly: “Probably one tipping point for us was the launch of our ad tech hub for Listnr. We went from growing 30% all of a sudden to 50% then 60% and we’re innovating in that space. When the market’s growing 30%, we’re growing 57%, we’re effectively growing the market.”
Although digital revenues are climbing, they are still just around 10% of what linear radio brings in. Kelly noted that if digital continues to grow at current rates, it could soon hit $50m annually and that becomes lot more meaningful. “I’m not projecting that,” cautioned Kelly. “But it’s certainly going to grow more than other media. There’s no doubt about that.”
With Listnr now profitable, every extra dollar earned is accretive.
Industry collaboration
Although there was a tussle with ARN that saw the predator back away, Kelly noted the industry is focused on sector growth.
He mentioned that company CEOs are all in on the big picture. “Ciaran [Davis], Pete [Charlton] and Tom [Malone] all believe in audio and we all believe in the power of broadcast radio. That was highlighted this week with CRA talking about the growth of audiences. We are an incredibly collaborative industry.”
SCA share register agendas
“That’s one of the problems., said Kelly candidly. “I don’t want to go into all the detail. But I think you’re well aware we’ve got ARN owning 15% of us. We’ve got ACM’s Anthony Catalano and Alex Waislitz owning 15% of us.
“We’ve also got Spheria Asset Management, which is effectively an activist investor who brought in at the same time as the proposal owning 10%.”
New SCA board member
Another part of a refresh was the addition of a new board member – Marina Go – the former editor of Dolly is no stranger to the media sector after a long career that includes time in publishing and sports management.
SCA chair Heith Mackay-Cruise said this week: “I am delighted to welcome Marina Go to our board. Her appointment follows an extensive search led by an external search consultant. After meeting with several outstanding candidates, we agreed that Marina has the ideal experience, skills, and personal attributes for SCA’s needs.”