Southern Cross Media Group is in a hurry. On the eve of its first financial results announcement after Seven West Media merged with SCA, incumbent chief executive Jeff Howard exited.
His sudden departure sent chins wagging in the industry, but SCA Group chair Heith Mackay-Cruise told B&T the rationale was simple.
The recently formed board, in which Mackay-Cruise succeeded Seven West Media’s Kerry Stokes, felt they needed a management team that could move more quickly in finding the synergies and cost efficiencies that brought the two businesses together.
“We think there’s a significant opportunity, and as we announced when we pulled these businesses together, to create a one stop shop multimedia brand platform, and we’ve got a lot of initiatives that we want to accelerate to drive both revenue and also cost savings,” he said.
When pressed on which initiatives are at the top of his to-do list, Mackay-Cruise said: “There are strands around business improvement, duplication of costs, economies of scale. We’ve also got duplicate properties. These are all, if you like, the low hanging fruit.”
As part of the leadership overhaul, former Southern Cross Austereo CEO John Kelly, who was responsible for the audio part of the SCA Group, has now been named interim CEO for TV and radio while a hunt for a new CEO takes place.
Toby Potter, the former SCA financial chief, will become SCA Group’s chief transformation officer and Scott Butterworth has been appointed CFO.
Butterworth aside, the new leadership team is largely from the SCA camp, but Mackay-Cruise said that this should not necessarily influence where the cost savings are found.
“It’s fair to say that any change in an organisation always creates a level of angst and unease,” he said. “We’ve communicated to all the staff this morning (23 February) in regards to the announcements both of last night on leadership changes and also the financial results.
“We’re very proud of all of our staff, whether that’s from the Seven West Media or Southern Cross Austereo, every one of our brands is really punching and punching hard.
“The reason why we’ve announced these changes go to the heart of our strategic application in bringing the two businesses together. There are scale benefits, but also efficiencies in cost, which goes to people and in property, primarily in the corporate services, not the front of microphone, or front of TV or the production side of the business.”
‘A massive opportunity’
In fact, one part of the business that could grow is SCA Group’s regional business, which now combines the firepower of SCA’s regional radio stations with Seven’s regional TV network, the largest in Australia.
“SCA has around 8,000 clients in regional Australia and of those 8,000 clients only 2,000 are Seven clients. That means that there are 6,000 clients that Seven hasn’t marketed their video or digital assets too,” Kelly said.
“So you can see where we’ll be playing. We won’t be reducing our regional salesforce, we are actually be charging them with increasing budget and increasing revenues whether it be across TV, BVOD or audio.
“The opportunity across regional Australia is massive and the its a chance to compete against the big tech platforms in a holistic way with a great suite of assets.”
Consolidation & collaboration
The consolidation of TV, audio and digital was a major motivating factor for Seven West Media and SCA to combine in order to better compete not just against traditional rivals, but the likes of Meta, Google, TikTok and American streamers for a share of the Australian advertising dollar.
“We had to do something as a sector and clearly you’ve seen that Nine has their own consolidation play. Aside from the cost benefits, it’s about combatting the large global platforms that provide our marketers and SMEs with digital solutions and targeted ROI campaigns,” Kelly said.
“We haven’t started on that journey yet, but the opportunity is using our multiple assets to provide a one stop shop to our customer base.”
Mackay-Cruise said to expect “far more collaboration” with traditional rivals like Nine and Paramount to showcase the power of TV, whose gains in audiences are not being matched by gains in revenue.
“What’s happening is the dollars that are associated with the TV market are less today than what they were last year, particularly as advertisers move to other social media and technology targeted platforms,” he said.
“The industry has a job to do to convince our key advertisers and agency partners about the power of TV, the power of audio, the power of digital and the power of our print assets.”
“There are ventures that ourselves and Nine in the marketplace around pooling parts of production, whether it’s use of helicopters or play out production. Anything that is non competitive in the supply chain makes sense for us to jointly operate. Anything that is around content and in front of camera or microphone, that’s where we compete.”
The pair also point out the unlevel playing field that Australian broadcasters face compared to their largely unregulated digital rivals, which have no local content requirements, pay virtually no commercial broadcast tax, or corporation tax for that matter.
“We want to work with our advertising partners, whether they are agencies or major clients, to make sure that we are making an impact with regards to Australian content,” Mackay-Cruise said.
“And we’re proud to actually have advertising that links to meeting the needs of Australian society.”
