Southern Cross Austereo’s (ASX: SXL) CEO Grant Blackley has played down today’s 25% boost in profits for the regional broadcaster, claiming media reform remains vital if they are to “fight the tide” against them in the regional TV market.
Blackley: media reform is vital for the long term prosperity of regional markets
“Our radio is performing well but we have enormous resources underpinning that,” Blackley told Mumbrella.
“I think media reform is vital for the long term prosperity of regional markets. We can not disguise the fact that regional television markets are still troublesome and what we are seeing is headlines for all those assets.
“Costs continue to go up, streaming continues to infiltrate our markets and advertisers are not supporting the asset as much as they used to.
“Reform of the reach rule of two out of three is vital and that will at least help us fight the tide that is coming through in a reasonably negative fashion for regional media.”
The radio and regional TV broadcaster today posted profits after tax of $43.379m, with revenues up 4.7% to $322m from $307m, on the same day media reports suggested Communications Minister Mitch Fifield would be taking a proposal to cabinet to change the laws in a way that might spark a series of media mergers.
Blackley also commented for the first time on court action between WIN and Nine where the Bruce Gordon-owned regional TV network is seeking to block Nine’s live streaming service 9Now claiming it breaches his affiliation deal.
“We are watching that with a lot of interest,” Blackley said. “There is no question that streaming services over the top without any consideration for affiliates is not good for regional operators.
“We are watching that case with much interest but at this point in time we are not pursuing a particular path.”
Asked if he would rule out taking similar court action, Blackley responded: “I wouldn’t rule it out because the more we see metropolitan operators streaming into the market after receiving payment for the services we provide, I think, it counter productive to the affiliation arrangement and the economics of regional media.”
Southern Cross Austereo and Network Ten are currently in an exclusive negotiating period, which Blackley refused to be drawn on, but he noted: “I will point out we are an affiliate of Seven, Nine and Ten over the course of the regional business.
“What is maturing at the moment is one element of that with Network Ten but, when appropriate, we will give the market an update.”
On the overall state of SCA’s business, Blackley noted he was pleased with the performance overall but noted improving performance at SCA’s Sydney and Brisbane HitFM stations remained a focus.
“We have openly called out that two areas of investment for us were those Sydney and Brisbane radio stations and have deployed resources there,” said Blackley. We haven’t had a full survey with Rove and Sam yet but we are pleased with their performance on-air and right behind where we take it.
Rove McManus and Sam Frost to be marketed more aggressively.
“We are marketing (Rove and Sam) more aggressively. Their success in the future will unlock greater success for Hamish and Andy.”
Blackley was more pessimistic about the future of the regional TV market but noted they were pulling in a solid share.
“The regional TV market has declined in the past six months but we are competing better in terms of the monetisation of the asset,” he said.
“We are exposed to an improvement (in audience) from Channel Ten through our affiliation in regional TV. We are pleased to deliver improvements in revenue across all the assets.”
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