Macquarie Radio downgrades profit forecasts as ad recession bites

Macquarie Radio Network is the latest company to feel the effects of the ad downturn, issuing an update to the ASX flagging that earnings will be around 10% lower than originally forecast.

The warning by Macquarie, owner of Sydney’s top-rating radio station 2GB along with Melbourne’s 3AW, Brisbane’s 4BC and Perth’s 6PR, comes after WPP AUNZ interim CEO John Steedman warned of further declines in the ad industry and the Standard Media Index reported the sixth straight fall in industry spending.

Macquarie Radio Network boss Adam Lang warned in February of an uncertain outlook for the first half of 2019

Macquarie’s full release to the ASX said: “Macquarie Media Limited (ASX:MRN) (“Macquarie Media” or “Company”) has amended its FY2019 EBITDA guidance.

“In the Company’s half-year announcement on 15 February 2019, MRN indicated underlying full-year FY 2019 earnings guidance (EBITDA) of $29-32 million. Trading conditions have fallen below expectations and underlying full-year earnings (EBITDA) for FY 2019 are now expected to fall between $27-29 million.”

At the time of the company’s mid-year results announcement in February, Macquarie CEO Adam Lang noted the market contraction.

“We have seen a contraction, below prior year period, of advertising spends in the December, January and February months and a shortening of booking cycles,” he said.

“Whilst we are now seeing more positive signs for March to June revenues, it is extremely difficult to forecast the impacts of the NSW election in March and the expected federal election in May, a subdued housing market, and variable business and consumer confidence.”

SMI’s figures for March showed radio ad spend had dropped 5.6% on the same period last year despite the NSW electionin 2019, with CEO Jane Ractliffe warning April’s spending will remain subdued due to the close proximity of Easter and ANZAC Day along with the federal election dissuading companies from advertising.

In its half-year results, Macquarie reported a 4.9% fall in earnings from the previous year to an EBITDA of $15.3m. The performance was not helped by a 1% increase in costs, in part due to the $3.4m defamation judgement in July against 2GB’s Alan Jones.

Jones, whose breakfast show dominates the Sydney radio market, is in negotiations with Macquarie over his contract which expires at the end of June. Details of the contract negotiations have been leaking to various media outlets, with The Daily Telegraph going do far as to suggest Macquarie had offered Jones a 50% pay cut to his $4m salary.

Both parties have been leaking their versions of the progress of the talks to friendly media outlets with the The Daily Telegraph reporting Macquarie had offered Jones a 50% pay cut to his $4 million salary.

Should Jones leave Macquarie, there would also be the question of his 1.27% stake in the company granted to him by then Macquarie owner John Singleton as part of the package which induced Jones to switch from then rival 2UE in 2002.

Last year Macquarie Radio Network was the star among Australia’s media stocks, picking up 36% for the year. So far this year, the stock is down 5.5%, closing yesterday at $1.75.


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