All eyes were on SCA this morning as the largest radio network in the country released its interim results for the FY 2024.
SCA’s update to the ASX pointed to a troubled radio market with net profits sinking by more than 70 per cent and its EBITDA falling 29.5 per cent year-on-year. SCA attributed the results to a “challenging ad market”.
It was not all doom and gloom, however, as SCA revealed a steep growth in LiSTNR as well as regional advertising.
The Headline
- Net profit for interim period dropped 71.1 per cent coming in at $4.4 million compared to $15.4 million for the 2023FY.
- Revenue fell 2.9 per cent year-on-year, dropping to $252.6 million compared to $260.1 million. A 2.2 per cent decline in metro radio was partially offset by a 2 per cent growth in regional radio and 27 per cent growth in digital audio
- EBITDA fell 29.5 per cent coming in at $31.1 million.
- SCA say “ad market remains challenging, though SCA broadcast radio revenues are tracking ahead of the market”.
- Growth in regional and podcasts: regional ad revenue up 2 per cent, numbers of users signing into LiSTNR up 60 per cent
ARN Takeover Bid
SCA gave no update on whether it was being taken over by rival ARN. However, they acknowledged the bid and confirmed that discussions around the deal are ongoing.
“Mutual due diligence and active discussions continue with ARN Media and Anchorage Capital Partners (Consortium) to determine whether the Consortium’s non-binding indicative proposal is in the interests of shareholders. SCA and the Consortium have not reached any binding agreement and there is no certainty these discussions will result in a transaction. In conjunction with its advisers, SCA’s Board has requested sufficient information to accurately form a view on the value and executability of the proposal”.
Cost-cutting On The Up
SCA is currently completing a strategic cost-cutting exercise with the impact expected in 2025.
“SCA’s strategic cost management review has delivered $30 million in annualised savings, well above the previous guidance of $15 million. The full benefits of these savings will be realised in FY25, with $20 million to be released during FY24, mostly in the second half. Non-revenue related costs for FY24 will be less than $310 million”.
Areas of growth
SCA CEO John Kelly said: “The impact of lower industry-wide national advertising expenditure was mitigated by the geographic diversity of SCA’s radio portfolio comprising 10 stations in metro markets and 78 in regional markets. Fuelled by robust performance from local advertisers, regional radio revenues grew by 2.0 per cent.
“LiSTNR’s monetisable podcast audience network of around 7.4 million monthly listeners is the largest in the Australian Podcast Ranker. Together with strong growth in our streaming audiences, this continues to drive consideration by media buyers and programmatic advertisers. Digital audio revenue of $15.6 million was an impressive 27 per cent higher than in the prior corresponding period. Coupled with active cost reduction and increased listening hours, this positive revenue momentum means LiSTNR is on target to reach a breakeven EBITDA run rate during the fourth quarter of FY24 and to contribute positively to EBITDA from FY25”.
