‘It’s great to get on with your life and run a business’: SCA boss glad ARN takeover talks are over
Soon, SCA will shed its TV assets, talk of takeovers will be firmly in the past, and LiSTNR will be cash flow positive. Finally, John Kelly can run a network that is all about audio.
“You know what?” SCA chief John Kelly says. “It’s great to get on with your life and run a business, and a successful business that is going to generate good returns.”
A lot can happen in six months. When SCA’s chief John Kelly presented SCA’s “difficult” half-yearly results in late February, the company was “in the midst of a corporate takeover that has now evaporated”.
As far as Kelly as concerned, any talk of main radio rival ARN swallowing up SCA is in the rear window.
“I’m just enjoying operating a business,” he says. “I’ve only been a CEO for 14 months and eight months of that was taken up by corporate activity. It’s so much more fun running a business without corporate activity prevailing over you.
“So, no,” he says, of the merger reappearing. “I’m enjoying the current blue skies.”
There’s still some lingering corporate activity: namely, selling off SCA’s regional television assets. Kelly says they are in “active negotiations” at the moment.
“We’re not only just talking to people, but negotiating the outcomes,” he says. “And we’ve got nothing binding, otherwise we would have announced that, so I would expect ‘months’ should be the timeline you should think about, as opposed to ‘weeks,'” he says, in terms of finalising a sale.
He adds: “Months doesn’t mean lots of months, you know, a few months…”
Kelly says SCA isn’t looking to shed any further assets: “We continue to state that our primary mantra is to be all about audio. And with the scale we’ve got in Australia, we’re undoubtedly Australia’s largest audio company.
“When you’ve got 88 radio stations across the country, when we reach 3.6 million or 70% of regional Australia through our regional network and then LiSTNR on top of that – it’s a very substantial network in itself – and we just want that network to perform the best it can in the coming year, and the years ahead.”
Kelly feels it’s a “misnomer” to suggest that broadcast radio and digital audio are suffering the same advertising downturn as other sector of the media industry, pointing out in the early months of FY25, “most of the audio companies have come out and said the market’s growing for both broadcast and for digital audio”.
Interestingly, given the recent sparring between the networks, Kelly said he is in lockstep with ARN’s chief Ciaran Davis when it comes to their shared focus in growing audio’s slice of the revenue pie.
“The reality is we got 34% of attention of consumers across Australia, but only received 9% of revenues. But we think the opportunity to grow the sea of audio from a revenue perspective is there for everyone. Once we grow that sea, then we’ll fight across the relevant shares – but we want to grow the sea – and everyone is on the same path with that, from an audio perspective.”
SCA’s digital audio plat LiSTNR is racing ahead in that regard, now having over two million users signed up, with around half of these regular monthly listeners. LiSTNR reaching EBITDA profitability in the June quarter, and is “expected to be cash flow positive in FY25. SCA’s digital revenue growth of 43% over the past twelve months helped the company offset a 1.7% fall in broadcast radio revenues, and a 8.6% drop in TV.
“We’re so excited about this,” Kelly says of the fast growth. “I mean, it’s only three-and-a-half years old. And to get any company profitable within a five year period, let alone a digital company, is quite remarkable.”
The ad-tech hub launched in March, and is “effectively taking on our digital counterparts in digital revenues and providing solutions to our business partners”, resulting in revenue growth of 57% in the first six months of the calendar year.
“The market only grew 31%,” Kelly points out, “so, we’re almost double that of the market – and we’ve got the $35 million of revenues. You know, with those type of growth rates, it’s started to become a really material part of our business and hopefully highly profitable in the years to come.”
The major expenses of building a digital platform have already been met, Kelly said.
“We’ve done this journey where we have spent considerable CapEx digitising and centralising our network to enable digital audio, but also to enable our broadcast to be sent across all around Australia. That is now complete.
“So we’re now in a position that this year can be reduced from $25 million down to $15 million, and next year it’ll be $10 million. That really changes the profile of our cash flows, moving forward. It changes the profile of our profit-loss in terms of what flows through to the bottom line.
“Earnings profiles and share prices are all about the future – and we think our future looks very good.”
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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