Blackley Flags Potential For More Internal Changes As SCA Leans Into Tech

Southern Cross Austereo (SCA) CEO Grant Blackley has flagged the potential for more internal changes as the media company looks to improve its operating model amid a fluctuating advertising market, as well as the expansion of new technology.

SCA yesterday posted its first-half underlying earnings and dividend, dropping 27 per cent thanks to a weak ad market. Underlying net profit after tax was $28.6 million, down 31 per cent from the previous year.

Last year in December, on what was known as “Black Tuesday“, SCA made up to 90 jobs redundant. However, Blackley confirmed to B&T while SCA did not nominate the exact number, it was “less than 90″.

At the time, a spokesperson for the network said: “The entire advertising and media sector is operating in a challenging and difficult market and Southern Cross Austereo has and is being equally affected.

“Management, with the support of the board, have conducted a comprehensive review of our workforce structure to provide an effective and efficient organisation for now and into the future.”

And now, Blackley has indicated the “potential” for “more change”, however, he added he believes the change will be across the board from all sectors as the industry embraces new forms “of transacting between each other”.

Speaking to B&T, Blackley said last December’s round of redundancies was brought on by a change in technology, which “brought about some workflow changes that were inevitable within [the] organisation.”

He said: “We changed our traffic scheduling, and moved our team to Coffs Harbour, which was actually scattered throughout the markets, so that brought about some change there as well.

Blackley said SCA looked at discretionary costs and said it found “elements of expenditure” that were not “critical to [its] strategy”.

“We tried to ease out any discretionary trust that we felt weren’t actually underlying drivers of our future strategy.

“There were a myriad of things that we actually looked at, which resulted in some people leaving because of structural change, and some people leaving because their roles, in some cases, were not critical to our future because of the changing nature of our strategy.”

Blackley said moving forward, SCA along with “every single media company” will be looking at how they can become “more effective, efficient and figure out how to lean into technology”. He said this will include “potentially automating more functions” to improve the products SCA delivers, as well as make it easier for its main advertisers to do business with the company.

“There are a lot of initiatives at an industry level, as well as our own company level, which I think will continue to improve our operating model. And potentially there will be more change, but I feel there will change across the board from all sectors as we actually embrace these new forms of transacting between each other.”

Despite yesterday’s disappointing results, Blackey is confident the media company can bounce back by “managing the affairs [it] can manage”.

“We’ve obviously tried to improve our content and our sales effort, and I think we’ve achieved that. Thankfully, we did come in line with the forecast in October, which I think was well received by the market.”

While market conditions haven’t really changed, Blackley said trading will continue in a “not dissimilar manner” and that SCA looks forward to the year ahead, adding he believes it will be “cycling over some lower prior comparisons.”

He’s also banking on the market “leaning more aggressively” back into spending, flagging a few of the major categories who have already made a start, including insurance, telco and automotive.

“Insurance is leading the way already. We’re starting to see a better trend line from the banks and financial institutions as they start to spend more, and we’ve had a progressively better investment in advertising across the board in the four quarters that we’ve seen.

“We’ve got some changes in the telco and automotive category, which may incite some further spending for those incumbents to actually improve their share or at least maintain their share with the Vodafone and TPG merger.

“I think that will ignite increased interest from Telstra, Optus and the new group. And with the exit of Holden, every company is of the attitude they need to ensure they get a piece of that action and effectively maintain their share in the new marketplace order. The best means of doing that obviously is marketing their products.”

While Blackley said SCA hasn’t received any briefs of that nature at this point, he said it “certainly seems to be laying the framework for something to be achieved on that level.”

In terms of revenue streams this year, SCA will be looking to personalised audio products to fill the gap.

“What we are seeing is more consumers seeking out on-demand content, which is evident in podcasts. And, taking that further extension to the on-demand position, people are also looking at personalised media – so being able to organise their media in a way in which they would like to consume it,” said Blackley.

“We’re starting to look at products in the market that might serve those needs. I think the most important thing is that audio as a platform is actually growing. And it’s growing quite strongly. So the base of audio being radio continues to grow, which is pleasing.”

As digital audio also grows, Blackley says SCA will “double down and invest in audio products”, as well as the  on-demand personalisation space.

On the music-only breakfast format SCA brought to its Hit station last year and whether that will remain this year, Blackley said it’s a future decision once more GfK radio ratings have been released.

“We’ve only had one clean book, Survey 8, and pleasingly in that survey, the audience grew by 80,000. So, we’ve only had one book, we did see an uplift in that and we will cotninue with that in the immediate future.

“Once we get through a few more books, we will be able to ascertain the performance of that and whether we continue the path of more music or in actual fact, we potentially do pivot and add a breakfast show back in there, but that’s a decision for the future.”

On potential mergers for this year, Blackley said there were plenty of rumours last year that SCA was either buying or merging with several companies. One such rumour was a nil-premium merger with oOh!Media, with reports indicating the pin was pulled on that in December. Blackley said he had no further comment on the rumour.