Southern Cross Austereo profit up to $45.9m for first half of year
Southern Cross Austereo has reported increased revenues by 1.3 per cent and profit by 1.8 per cent after tax to $45.9m in its financial results for the half year to December 31.
Earnings from TV were up $1.4m for the period to $112.4m, and radio saw a $4.8m upswing to $219.5m.
The Southern Cross Media Group (SCMG) also confirmed successful re-financing of its $650 million debt facility on “more favourable terms”.
CEO Rhys Holleran said in a statement: “It is pleasing to see some top line growth in the business, especially in television. We are determined to keep building on those gains in 2014 by investing in new shows in key markets which will hold us in good stead for the future.”
Holleran said the market has been short generally, as January trade was better than they had expected, but February was not as good as they had thought it would be 30 days ago, which Holleran said “reinforces the point the market is short and difficult to read”.
Regional television has been short and choppy, with business picking up following investment in events such as the Big Bash League and Sochi, and Holleran said this should set the network up for positive growth.
Radio has been steady to the end of January he said, with metro radio, accounting for 42 per cent of its audience in low single digit growth.
Regional radio has been steady locally, Holleran said, but choppy nationally as it has a very small client base affected by one or two advertisers and the change in government resulted in a withdrawal of advertising.
“Thank god it’s not a huge part of our business but it is troublesome because regional radio business is the most predictable, as it has a large amount of clients to lots of markets, so the sum total of that is that I’m not sure there’s going to be significant growth,” Holleran said.
“For metro radio, most pundits have said that radio is going to be flattish, low growth, and I think we are seeing that in trend now so the question is then around where does our share go relative to that.
“We think it is not unrealistic for us to expect to hold share. And you can make any assumptions you like around that, but the reality is the year’s only got four more months to run.
“What it means is that in year 15 is a more complicated question. And TV looks like it’s found its bottom and it doesn’t look as though it’s going to fall off the planet so it will bounce around too.
“So it will be low growth, we’ve got a few more costs in, we’ve got benefits that are flowing through.”
Holleran said the group made the “smart decision” to cut costs in seven unproductive areas of the business to invest it in areas of growth, such as marketing spend and content development for new shows on the Today Network and Triple M.
He said response has been positive particularly for the new 2Day FM breakfast show in Sydney, however he reminded shareholders the shows will take time to build and SCA has planned for that.
“Survey one comes out March 11 it should not be regarded as the last word on the rebuild of the Today brand for this company, it should be the first word,” he said.
“Our plans are pretty solid. We are promoting our key breakfast programs in every capital city. It isn’t just about Sydney and Melbourne, we are full-on large scale attack in every market that we operate in, for us it’s a real priority to do that.
“It’s about the regeneration of the entire Today portfolio of radio stations and we’ve invested heavily in that.”
Without revealing specific details about how the changeover of shows may have saved costs, Holleran said: “The balance of us marketing, putting the cost of programs through, recruiting an all-star lineup for breakfast, the net of all of that we’re pretty clear on saying that everything we’ve saved we’ve reinvested. That is as clear as I can be on the matter.
“I don’t want to talk about are we paying our people less, that’s not what we’re on about. What we’re on about is creating great shows and resourcing them properly and that’s what we’ve done.”
