Challenging trading conditions: Max Moore-Wilton at SCA AGM

Southern Cross Media made a Net Loss After Tax of $296 million, but the poor result was significantly impacted by non-cash impairment charge of $393 million to account for the decline in viewing of the company’s Channel Ten affiliated regional tv network.

As reported previously, with the impairment charges removed, Net Profit After Tax (before significant items) was $80 million. The board declared a final fully-franked dividend of 3 cents per share, making dividend payments 7.5 cents per share for the full year.

SCA Chairman Max Moore-Wilton told shareholders at the company’s annual general meeting yesterday that the 2014 financial year continued the “challenging trading conditions seen over the last few years in the advertising sector.”

“The improvements in consumer sentiment following the federal election in September 2013 have proved shortlived, with sentiment returning to levels experienced during 2011 and 2012. As a result ofthese difficult trading conditions, revenues reduced marginally by 0.3% to $641 million.”

Commenting on the company’s radio division performance, Moore-Wilton said:

“The success of our Triple M network continued during the year. It dominates male audiences in the 25-54 age band with a national audience of nearly 900,000 listeners and a clear number one position for that demograph.

“During the year we commenced a regeneration process of our Today network, which focuses on younger audiences, 18-39, with a female skew. The launch of the ‘Fifi and Dave’ breakfast show in Melbourne has been successful in its first few months and it is rated second only to the Triple M ‘Hot Breakfast’, giving us the number
1 and 2 position in that market. The launch of a new breakfast show in Sydney on the Today network has been considerably more challenging and we continue to work very hard at improving the Today network and in reclaiming listeners.
“Metro revenues were down 0.6% for the year, to $249 million but will be down further in 2015 as we cycle through tough comparative figures this year and continue with the re-generation process on the Today network.
“We continue to exhibit strong leadership in the digital space and are the number one radio group online and number one for social engagement with 5.1 million Facebook fans and 1.3 million Twitter followers. We are one of Australia’s fastest growing digital publishers with over 2.8 million monthly mobile browsers and 17.7 million digital video views annually. Strong growth in audience and engagement was translated into a 17.3% growth in digital revenues during the year and this remains an important area for the growth of our business. Cost control remains a relentless focus for the group…”

In what will be his last AGM before stepping down as chairman, Moore-Wilton again prodded the government to undertake media reforms, saying he has one major regret, “that the government has not yet sought to reform a number of outdated legislative regulations which are preventing the industry from moving to meet the challenges of new technologies and changing market requirements.”

CEO Rhys Holleran said sales have been “flat” in the first quarter of the financial year, since the previous results briefing in August.

Regional radio revenue declined over the first 2 months of the year, but returned to growth in September.

He said metro market share has “stabilised at 28-29%” but this is “below where we would like it to be.”

“The Today network continues to operate in a competitive ratings environment and our loss of audience is the key contributor to our erosion of market share. The  regeneration of the Fox brand in Melbourne has been a success. It’s no secret that the 2DayFM breakfast show has not met our expectations and we will continue to

work on returning the station to a leading position. The Triple M network continues to dominate the male audience demographic and, with the number 1 breakfast show in Melbourne and its unique ‘Rock, Sport and Comedy’ offering, is growing revenue share… We are committed to returning the Today network to a market leading position…
“We have seen phenomenal growth in our Digital footprint over the last 12 months which is the result of many years of hard work. Our digital presence now rivals that of some of the largest online publishers in Australia and we are proud to be the most socially engaged company in Australia. We are well positioned to take advantage of
the opportunity to monetise our digital presence in the future.”

In the formal business of the meeting, the election of new directors and adoption of the remuneration report were approved by shareholders. With an adverse shareholder vote against the remuneration report last year, the board worked closely with major shareholders this year to understand their concerns and modify remuneration to satisfy shareholder concerns.

Following up from the AGM, today’s Australian newspaper reports on the potential sale of SCA’s underperforming assets, with Moore-Wilton telling the newspaper: “The board will be having a major strategy discussion at its first board meeting in November. I will leave anything we might want to say until after that… We intend to maintain our position of leadership and adjust our strategies according to the circumstances.”



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