Southern Cross Austereo soars with 40% profit rise

“We’ve had a strong year,” CEO Grant Blackley has told radioinfo.

Southern Cross Austereo reported a net profit after tax up 40.7%, and revenue growth of $690.8m (up 7.5%) at the end of the 2016 – 2017 financial year.

Regional revenue brought in the largest numbers, up 10.3% to $382.2m.

Metro contributed $242.3m up 2% and corporate revenue was up 24.7% to $17.8m.

Speaking to radioinfo just after the results announcement today, Blackley said the company has positioned itself to concentrate on “high growth sectors.” SCA sold many of its regional transmission towers during the financial year, giving it a one off windfall of cash to use to reduce debt. There was an 18% reduction in debt this year, including repayment of the company’s $37m securitised receivables facility and renegotiation of company loan facilities to a lower rate.

“It’s a good day, we are very pleased,” said Blackley, praising his two and a half thousand committed staff for their diligence in helping the company achieve a good result.

The better than forecast full year earnings come as SCA revealed it would start a new company called Mall Media which will display ad content on large digital screens in regional shopping centres owned by property investment giant QIC.

“We will be delivering local advertising content to local communities… we looked at other assets but decided that retail-out-of-home was a good asset,” Blackley told radioinfo. “We see synergies across our sales teams and our content producers that will make this new business unit successful.”

SCA already has a combined sales force of 350 people in regional markets across 58 offices. “There are 45,000 regional clients and they will benefit from this new opportunity,” he told radioinfo.

Following today’s results announcement the SCA share price was up 2 cents to $1.34, with a final fully franked dividend of 4 cents declared, taking full-year dividends to 7.75 cents per share.

After switching network affiliations from Channel Ten to Channel Nine, the company’s regional television businesses are performing better.

Radio is performing well too. “The election was good for us, there was an election bump in advertising last year,” said Blackley.

Metro revenue was up to $247.2 million, with expenses slightly reduced from $191 million to $187 million.

Regional radio revenue was up 3.3% from $169 last financial year to $174 million this year.

Regional revenue grew 2.0% after consolidating growth of 6.1% in the prior year. National revenue grew by 3.4%.

The 50:50 balance of local and national advertising in radio is something Blackley is pleased with, “It gives us resilience against the ups and downs of the markets, we are strong in both local and agency advertising, so this smooths out the bumps in some years,” he said.

As someone coming from television, what is the difference between radio and tv? “I have learnt that radio is more responsive,” Blackley told radioinfo.

The network rebranding of the Hit and Triple M networks is complete, which will “lay the platform for higher growth across all metrics in year ahead,” according to Blackley.

He also pointed out that SCA owns 50% of all the commercial digital radio spectrum, which puts the company in a good position to segment its programming to cater for many audience segments. “Our network alignment is complete across digital and analog platforms, we have experimented with various formats and we are now confident there will not be any cross cannibalisation of our formats.”

Blackley is up-beat about the new Mick and Jess show and is confident that the format changes in place to replace Hamish and Andy will continue to deliver success for the network. He also points to the company’s new alliance with PodcastOne as an indication of where new revenue and content will come from in the future.

New Drive brands on the Hit & Triple M networks “will provide an opportunity to grow the cumulative audience base,” according to Blackley.

“SCA is enhancing the audio experience for our audiences with a range of new digital radio stations, improving engagement and accessibility to our products via a range of devices, and generating better information about our consumers so we can deliver them the high quality audio content that they want.
“Audio on demand is following the way of video on demand. Building on our long standing expertise in creating and selling audio, SCA is developing a new Australian podcasting network which offers listeners original audio content on demand available through the PodcastOne website and mobile app,“ he said.

With 2Day FM Sydney well into the program year with Em and Harley on breakfast, Blackley would like to see more ratings growth, but is keen to express ongoing support for the breakfast pair. “I don’t see any changes. I think Em and Harley are doing a great job. We have put a substantial amount of marketing behind them to improve awareness and reach, so we hope their performance will slowly grow over time, as any new format does when it’s introduced into a market.”

Blackley is also looking forward to growing the podcast market. “Through our association with PodcastOne we expect podcasting to become a maturing business. It has moved from zero dollars to what is forecast to be a $550m market.”

SCA’s three core competencies are national reach, localism and the strength of the company’s brands, according to Blackley.



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