Southern Cross Media Group Limited (SCA) has announced its financial results for the fiscal year ending 30 June 2024, presenting a mixed performance that reflects both the challenges and opportunities within the media landscape. The company reported a slight decline in revenue and a notable drop in underlying EBITDA. However, the year’s second half saw a turnaround, hinting at a potentially stronger performance in the upcoming fiscal year.
For FY24, SCA’s total revenue was $499.4 million, representing a 1 per cent decline from FY23’s $504.3 million. The company also saw a 14 per cent reduction in underlying EBITDA, which dropped to $66.2 million from $77.2 million the previous year. These declines are attributed to challenging market conditions, particularly in the advertising sector.
However, SCA’s performance in the second half of FY24 provided some optimism. Revenue in H2 FY24 increased by 1.1 per cent, and underlying EBITDA rose by 6.0 per cent compared to the prior corresponding period. This improvement was primarily driven by SCA’s strong positioning in the 25-54 demographic, which remains highly sought after by advertisers, especially in metro and regional radio markets. The company’s increased share of metro advertising revenues and robust growth in digital audio revenues were also significant contributors to this performance.
SCA CEO John Kelly told B&T that whilst the first half results were difficult, it was in the middle of an attempted takeover by an ARN lead consortium and a major competitor. “The second half results, however, are showing really good momentum and are really flowing well into the future, giving us good momentum as we head into FY25. In many ways, the first half was very difficult and the second half, we’ve really changed things up in terms of our performance in relation to audiences and revenues,” he said.
Kelly said that part of this shift was due to a switch in focus to “audiences that matter” – namely, the 25-54 metro demographic that garners 70% of all advertising briefs. “Revenue shares in Metro markets are recorded each month, and each month, we grew that share over the previous corresponding period”.
LiSTNR and Digital Revenue
A key highlight of SCA’s FY24 results is the strong performance of its digital audio platform, LiSTNR. Digital revenue reached $35.0 million, a 42 per cent increase from FY23, with a particularly impressive 57 per cent growth in the second half of the fiscal year compared to H2 FY23. This growth has been driven by the ongoing expansion of LiSTNR’s user base, which now includes over two million signed-in users, with one million interacting with the platform monthly.
LiSTNR also achieved underlying EBITDA profitability in the fourth quarter of FY24, marking a significant milestone for the platform. SCA’s digital revenue has grown at a compound annual growth rate (CAGR) of 34 per cent since FY19, underscoring the importance of digital transformation in the company’s long-term strategy.
Ad Tech Hub
LiSTNR had been working on developing its ad tech hub for the last 12 months, and it finally launched that in March. The hub has shown to be a massive driver of premium commercial returns for advertisers, giving them the ability to connect with relevant audiences on LiSTNR and other digital audio distribution platforms, and has been hugely beneficial to SCA’s bottom line.
“No surprise, but we saw a huge increase in take up from the advertising community with their ability to activate campaigns to compare with the best of Spotify or Meta or Google or any of the digital companies. We were playing in the same space, which meant that those advertisers were willing to participate, particularly in Australian-owned tech platforms and customer platforms, in order to suit their needs,” Kelly explained.
Cost Management and Impairment Charges
SCA has also made significant strides in cost management, with non-revenue-related expenses coming in at $308.4 million, slightly below the company’s guidance of $310 million. This cost discipline, combined with strategic investments in digital capabilities, particularly for LiSTNR, has positioned the company well for future growth. Capital expenditures for the year were $15.8 million, which is in line with guidance, and are expected to reduce to approximately $10 million in FY25 as SCA completes its digital transformation investment cycle.
However, the company did recognise a substantial impairment charge of $326.1 million ($228.3 million after-tax) against the value of its broadcast licenses within the Broadcast Radio cash-generating unit (CGU). This non-cash impairment significantly impacted the company’s net profit after tax (NPAT), which fell to a loss of $224.6 million, compared to a profit of $19.1 million in FY23. Excluding the impairment and other significant items, the underlying NPAT was $11.2 million, down 49.2 per cent from the previous year.
“As an organisation, we don’t put targets out in the marketplace in relation to X amount of people or X amount of costs. We’re just activating costs in an active way,” Kelly said.
Strategic Review and Outlook
SCA has re-commenced a strategic review of its non-core regional television assets, with active negotiations underway with several interested parties. The potential sale of these assets would allow SCA to concentrate its efforts on its core radio and digital audio businesses, which have shown resilience and growth potential despite the broader market challenges.
“We were planning to sell those licenses pre-October, when the ARN consortium launched their bid, so we had to call that off during that process. That finished in May, and since that time, we have clearly stated we’re all about audio in terms of our overall strategy. If you’re going to be all out about audio, it means that probably, unfortunately, our TV assets don’t have a place in our arsenal moving forward,” Kelly explained.
“We very much have reignited those discussions with various parties, and we’re in active negotiations. I would hope there’s a there is a conclusion to that process in the coming months”.
With the freed-up resources from this potential sale, the network will be mindful of its debts and will not spend any money in the CapEx area. “It is really going to reduce debt, or will we use it to pay out a dividend to our shareholders. One of those two uses”.
Furthermore, SCA’s reset of its operating model is expected to reduce non-revenue-related costs further in FY25, providing a pathway to improved cash conversion and lower leverage by the end of the next fiscal year.
Board Succession
SCA announced a planned board succession as part of its ongoing governance strategy. Helen Nash will retire from her role as a director on 30 September 2024, to be succeeded by Marina Go, who will join the board as an independent non-executive director on 1 October 2024. Go, who brings extensive experience from her roles across various sectors, will chair the Board’s People & Culture Committee and join the Audit & Risk Committee, subject to shareholder election at SCA’s AGM in November.
Kelly thanked Nash for her dedication over her time with the media company and expressed excitement at Go’s appointment. “We are excited to have someone with Marina’s experience join the board. She’s clearly got a fantastic pedigree in various media companies, including digital media companies. She’s very well regarded as a director. She’ll head up our people and culture committee. I’m excited about having her on”.
Looking to the year ahead, the media brands’ priorities are to continue to realise and utilise the benefits of momentum across the board. “Our business really benefits from the momentum in terms of audiences and revenues. Into FY 25 we plan to continue to control our costs, deliver cash flow, return to our shareholders, and also, quite clearly, finalise the sale of our TV assets in the coming months,” Kelly explained.
Southern Cross Media Group’s FY24 results reflect a year of both challenge and transformation. While traditional revenue streams have faced headwinds, the company’s strategic investments in digital platforms like LiSTNR are beginning to pay off, as evidenced by strong growth in digital revenue and the platform’s profitability. As the company enters FY25, the market will be watching closely to see if this momentum can be sustained and whether SCA can capitalise on its digital transformation to deliver long-term value to shareholders.
