In the six months since a glittering Upfront that heralded ARN‘s pivot to become an entertainment network, much has happened to cease any forward momentum. It is to the credit of the network that in this morning’s AGM they addressed where they stand head on with Chairman Hamish McLennan saying they are not where they wanted to be, but are encouraged by the progress they have made.
Some of the progress occurred in the last 48 hours. ARN reclaimed more than 6 million shares that were given to Kyle and Jackie O as part of the sign-on deal when the pair agreed to deliver KIIS breakfast for the next ten years. The ACMA also popped up again to let us know that ARN have now entered into an 18-month court-enforceable undertaking for breaches of complaint-handling rules under the Commercial Radio Code of Practice. With the main protagonists of these breaches gone, this undertaking is unlikely to cause the network issues.
Key points from the AGM:
ARN Media reported that revenue fell 10% to $285 million in the year to December. Metro radio revenue was $147 million, regional radio revenue was $110 million, digital revenue was $27 million. EBITDA (profit) was $48 million.
Chairman Hamish McLennan said the media industry is undergoing a profound technological and cultural shift, with advances in data, automation, AI and digital distribution all reshaping how audiences engage with content.
“Despite the pace of change, broader macro-economic headwinds and ongoing softness in the advertising market, the Board is encouraged by the progress we have made against the company’s strategic priorities.”
Over the past 12 months, ARN has reduced its net debt by $25 million, its debt facilities have been refinanced, liquidity headroom remains robust and cash generation remains strong. McLennan said ARN remains financially sound – cash generative, well-funded, and positioned with the balance sheet strength and liquidity required to deliver long-term value for shareholders.
He was challenged by shareholder David Kingston, who made various points about the decrease in shareholder value in the past 12 months.
Asked why it was taking so long to sell the Cody Outdoor business, McLennan said the company sees it as a non core asset and will do its best to get value from the sale, but would not give more details because negotiations are underway.
Kingston also pointed out that, in his opinion, the valuations of the company’s radio licences were “excessive” and “flying in the face of [market] reality.” The company will reasses these values again in June in its six monthly accounting review.
Asked about the “three biggest mistakes” of the board by Kingston, McLennan replied, “I accept my responsibility as chair… if we get our strategy right we will improve…” He continued to push for “media reform” to allow Australian media companies to better compete with international digital companies.
Hamish McLennan intends to “willingly” increase his shareholding in the company with the acquisition of $500,000 worth of additional shares, to show his commitment to the company’s strategy. He confirmed that he had personally signed the Kyle and Jackie O contracts, explaining, “they were our biggest talent, bringing in the highest revenue and there was a competitive offer at the time.”
The Remuneration Report was rejected by shareholders, as an indication of the dissatisfaction with the current share price. Commenting on the Remuneration Report, David Kingston said, “it’s tone deaf to the shareholders to put this motion forward.”
More than 90% of ARN shareholders voted against it, which means an amended remuneration report taking investor concerns into account will need to be delivered. Should 25% or more vote against the second report, there would then be a further vote to decide whether to spill the ARN board.
Of the current court proceedings involving Kyle Sandilands and Jackie Henderson, McLennan said “I would like to assure shareholders that the Board is committed to defending these claims and actively pursuing the cross-claims.”
“As these matters are now before the courts, we do not intend to comment further.”
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