HT&E to close Gfinity Esports as it posts a 4% revenue drop due to softening radio market

Here, There and Everywhere (HT&E), the holding company of radio business ARN, Gfinity Esports Australia and Emotive, among other investments, has seen its revenues drop by 4% thanks to a softening radio market, but a continued focus on streamlining the business is having some positive impact on the bottom line.

Group costs dropped by 13% to $95.8m while corporate costs declined 11% from ‘group simplification’. Overall, the business took $130.9m in revenue from continuing operations, with a first half earnings before interest, tax, depreciation and amortisation (EBITDA) of $38.1m, a 26% increase.

Those savings are likely to continue with the announcement that HT&E would be closing its sporting arm Gfinity Esports Australia, which it launched in 2017, at the end of 2019 due to a lack of “sustainable, positive earnings” from the investment. This closure means the business, which HT&E invested in via HT&E Events, has been posted as a $5.3m loss on the company’s net investments as of 30 June 2019.

The company also announced it would be reducing the number of corporate roles, with both chief financial officer Jeff Howard, and group general counsel and company secretary Yvette Lamont to leave HT&E at the end of the year. Andrew Nye, former HT&E group finance manager and CFO of Adshel, will be taking up the role of CFO of both HT&E and ARN from August 14.

Howard has been with the business since 2010 and Lamont since 1998.

Gfinity may not be the only business getting the chop from HT&E in 2019, with the company announcing plans to review its non-audio businesses, which includes agency Emotive, to “determine how they can better integrate into audio, and if not, what alternatives are available to deliver better shareholder value”.

HT&E chairman Hamish McLennan said the closure of Gfinity would help the business focus on its talent in the audio industry.

“We are first and foremost a radio and audio business since selling Adshel and over the last six months have spent a huge amount of time focusing on the objective of creating Australia’s most complete and compelling audio offering,” said McLennan.

We have made good progress reducing corporate costs and simplifying the management and operational structures between HT&E and ARN. We are assessing our existing investments to determine how they can better integrate into audio, and if not, what alternatives are available to deliver better shareholder value. As a result we have decided to close Gfinity Esports Australia in which HT&E holds a 35% effective interest. While the business has achieved some significant and world-leading results, the economics of esports in the Australian market are yet to deliver sustainable, positive earnings.”

“We will also consider investment opportunities that are aligned with our overall audio strategy.”

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2018 saw HT&E fold Conversant Media into ARN and sell outdoor arm Adshel to Ooh Media.

ARN itself reported a 3.8% drop in revenue to $115m, with the radio market down 2.4%. For the first quarter of 2019, revenue fell 5% from the same quarter in 2018. While the second quarter buoyed these results somewhat in the early weeks, the completion of the federal election saw ad spend fall again.

HT&E reported its goal with ARN into the second half of 2019 was to continue growing ratings and revenue share by “recruiting and retaining the best radio talent in Australia”. The business also extended its licence extension with podcast platform iHeartRadio until 2036. The platform delivered a 48% revenue growth in the first half of 2019, something which HT&E expects will continue to grow following the rise of popularity for podcasts in Australia.

The company did, however, flag a potential costs blow out in the second half of the calendar year, due to talent costs and its inability to repeat one-off savings.

“The changing shape of cost of sales as digital revenue grows, contracted talent and other cost increases, and other possible non-repeat savings from 2018, means that cost growth in H2 is likely to exceed revenue growth. A cost and efficiency review is continuing to identify opportunities to reduce operating expenditure,” its financial results said.

HT&E CEO and managing director, Ciaran Davis, said: “Our absolute focus is on our core radio business that remains highly cash generative with exceptional margins. Across the network we are reaching record numbers every week and we have maintained our winning edge, retaining the number one and two FM breakfast shows in Sydney, and KIIS 101.1 in Melbourne recording its highest station audience since 2014. We are continuing to focus on growing ratings and gaining market share by recruiting and retaining the best radio talent in Australia.”

“Broadcast radio remains our core business, and the big opportunity to transform from a radio offering to an audio business. We already deliver the most complete audio solution in Australia and our digital platforms that extend audience reach are an important part of this. With our iHeartRadio platform we lead the market and are investing in technology and data capability for targeted advertising to generate growth.”


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