ARN’s challenging first half ‘finishes strongly’

HT&E Limited releases its 2017 Full Year Results. 


On a statutory basis, segment revenue from continuing operations was up 58 per cent to $472.3 million compared with $298.6 million in the previous year. The results incorporate the acquisitions of Adshel and Conversant Media in October 2016, with $161 million in revenue directly attributable to these acquisitions, and the balance predominately due to organic growth across Adshel, offset by declines at Australian Radio Network (ARN) in the first half. 

The company’s final dividend of four cents per share has been declared in line with policy, and CEO Ciaran Davis said ‘the company’s balance sheet is strong.’

Staff and talent cost growth of $6 million were reported to be consistent with the first half trend. ​

Key ARN highlights for 2017 include regaining the number one ratings position in August, and ending the year as the number one metropolitan market in the country.

The network achieved its highest network share ever in Survey 8, and with KIIS 1065 and WSFM taking the number one and two spots in Sydney, Perth audience share up 50%, Melbourne remains the network’s biggest opportunity. 

‘The changes we have made there are intended to capture a better share outcome in that market, and a better national share. We expect it will take several ratings periods before we see audiences and the market settle,’ said Davis. 

‘The focus is quite simple: grow ratings, win revenue share and expand our digital offering. In particular, we are looking to strengthen the performance of our Melbourne stations, to match the success in Sydney. 

‘Jase & PJ delivered a clear point of difference in a competitive market with little differentiation, Gold is strong across the day, but breakfast ratings have been below station average for a number of years. 

‘The acquisition of Christian O’Connell from London is a great win and presents a real  opportunity to drive greater consistency in results. His unique broadcasting ability will resonate well in Melbourne. 

‘Across the KIIS Network, the changes to national drive have been made to secure a tenure of at least three years for the new show. And the opportunity arose to invest in Will & Woody. Drive is a very important day part, proving attractive to advertisers, and we believe the ideas and content integration that this new drive show brings to the market will be well-received.’

Revenue performance reflected ARN’s improved ratings, and in the second half grew 5.1% compared to market growth of 1.7%, offsetting the first half decline. 

Second half growth of 9.5% was attributed directly to improved ratings and changes to commercial structures, with benefits seen form the 2016 licence fee holiday, and ultimately the 2017 removal of licence fees. 

Davis reiterated that expansion of digital audiences remains a key focus.

‘In addition, while radio continues to be as resilient and relevant as ever, ARN is also building an audio business of the future engaging with existing and new audiences across platforms, such as iHeartRadio where we have over 1 million registered users. And the largest podcast library in the country, and have commenced digital ad insertion to monetise.”

With Vevo and Pandora recently leaving the market, Davis added:

‘I think it’s also worth pointing out that when you have control of your ecosystem, which we do with iHeart, you’re not as reliant on partners to grow a digital audience. We’re controlling and making our own destiny of – it’s something we’re driving internally.’

With the last of the licence fee payments made last year, iHeartRadio as a standalone is not yet profitable, however Davis saw further opportunity for digital gains.

‘From a radio perspective, FM is still the key driver of value for shareholders. It is an extraordinarily profitable business with huge potential, and ​radio is as relevant as it ever was in Australian markets.

‘From a digital perspective, there’s no doubt, as time goes on, audiences and consumers are moving towards other forms of audio enter. They’re not engaging with it as long, they’re not listening to it as long, but we are offering through our iHeartRadio platform the ability to transfer audiences and grow new audiences from a digital and FM spectrum perspective.’
 

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