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ARN points to ratings success as revenue slides 40% in April

Australian Radio Network (ARN) has seen revenue fall 40% in April and expecting a similar result in May, but parent company Here, There & Everywhere (HT&E) has pointed to the company’s strong ratings results and lack of debt as its path through the COVID-19 pandemic.

Chairman Hamish McLennan said the business has one of the strongest balance sheets in Australian media with $111m net cash and an undrawn $250m debt facility.

“HT&E is in a very strong and stable position during these unprecedented times and thanks to a number of strategic steps taken last year, our business is one of the better placed media companies in Australia currently facing into this crisis,” said McLennan.

ARN’s results [click to enlarge]

As the overall number one metropolitan radio network in the country at the end of 2019 and it’s best performance in the ratings since 2015, McLennan said the business was well position to weather the revenue and earning drops. ARN includes the Pure Gold, KIIS Network as well as The Edge and iHeartRadio brands.

Direct clients have specifically been impacted, according to HT&E’s reporting, normally reflecting 30% of the revenue. However, the high level of cancellations following the COVID-19 outbreak have ceased. Financial services, government and supermarkets have been shining lights in the bookings, but May is expected to perform in line with April.

Earnings before interest and taxes (EBIT) was down 15% across the business while net profit after tax (NPAT) reduced 7%. Group earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped 17% to $59.9m.

The business reported to have taken steps to derisk itself by signing its talent on longterm contracts and divesting the parts of the business that didn’t fit with HT&E’s strategy. The company has closed or sold a number of companies recently, including its esports arm and The Roar.

The health and safety of HT&E’s staff is its priority, according to the reporting, but all staff have been able to work remotely and broadcasts have not been impacted. The board, CEO and management team have all taken 20% cuts and will forego all incentive payments for 2020. Staff are also working reduced hours and some have taken pay cuts for three months. The business has also flagged a number of non-repeat savings related to government initiatives.

ARN’s core focuses [click to enlarge]

HT&E CEO Ciaran Davis said the business had undergone a huge effort to put its radio business at the forefront and ensure the pandemic didn’t cause interruption for listeners.

“As an industry, we have actively managed any misconception that COVID-19 was going to have a negative impact on radio listenership – particularly any decline to in-car listenership. It was critical that advertisers were provided evidence to the contrary and retained confidence in the strengths of the medium.”

ARN is reporting radio listening has risen, an additional 20 minutes in breakfast, over an hour in the workday and 18 minutes in drive. The decline in consumers commuting has not impacted listening, reports the business.

Revenue has dropped 7% overall for the HT&E business, $252.7m compared to $271.8m in 2018. A fully franked 8.6 cents per share dividend will be paid to shareholders.

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