SCA boss Grant Blackley admits company could be a buyer or a seller ahead of imminent media consolidation

Southern Cross Austereo’s CEO Grant Blackley has admitted all media companies are running the numbers on each other ahead of imminent consolidation.

Most media companies have been getting their house in order over the past 12 months, he said, and “running the numbers on every permeation”. SCA, he conceded, could be either a buyer or a seller when it kicks off.

Blackley: Running the numbers

“We could be both [a buyer and seller],” he told Mumbrella after SCA released its financial results for the first half of the 2018 financial year. “We work on behalf of our shareholders and what we’re charged with doing is navigating and charting the course for the company that provides the greatest return for shareholders. Pleasingly, our balance sheet is vastly improved on where it was. We are in good health.”

Thanks to a program of reducing SCA’s net debt, Blackely said the company is more in control of its own destiny when it comes to consolidation, than other media companies.

Now, he said, media consolidation is more of a case of ‘not if’, but ‘when’.

“I suspect there is an opportunity for some [companies] to move. I think a lot of companies have been getting their house in order over the last 12 months. We saw media reform come through last year, so really what we were doing was reasonably fictitious in relation to what deals we could or couldn’t do when the legislation wouldn’t allow us to do them.

“The fact that is does [now allow us], we’ve let that wash over us. It’s ingrained in the legislation. We’ve passed Christmas and results are behind us as we get into the year. I think that raises the opportunity for acquisitions and mergers.

“I think it would be fair to say that every single media company has been running the numbers on every permeation and we’ve all come up with slightly different priorities. We certainly have run the numbers on every permeation we feel would suit our company and shareholders. And whilst I won’t disclose that today, I do think that there is opportunities for us, and we’re open minded to those opportunities.”

Earlier this week, Fairfax also used its results to flag to the market it will take advantage of any media consolidation opportunities.

Fairfax’s net profit of $38.5m was a 54% drop on the $83.7m it made in the prior corresponding period. SCA’s statutory results revealed a 21% drop in profits from $48.5m in the first half of FY17 to $38.2m.

SCA noted the decline in its profits could partly be attributed to a downturn in male-skewed briefs, which hit the Triple M Network, and the underperformance of the 2Day FM Sydney breakfast show.

The Em, Grant and Ed Show: making subtle changes

Blackley, however, told Mumbrella he was confident the ongoing changes to the program would turn its fortunes around.

“I think any major talent show and major network will subtly make changes through the course to improve any radio format, and we’ve seen that with just about every leading format in Australia. You do make subtle changes.

“Obviously Em [Rusciano] is the cornerstone of the format. The show [2017’s The Em Rusciano Radio Show with Harley Breen] was named after Em. We now have a family with Grant [Denyer] and Ed [Kavalee] there who are two professional broadcasters.”

He said this, combined with a shift in its music programming, should put 2Day FM back on the map as a top three competitor.

“If we kept doing the same thing, which was targeting a younger audience, with younger content and younger music, I’m not sure there’s a high point of differentiation, particularly versus Nova and Kiis.

“So therefore, we’re nearly fighting with one arm behind our back. So to try and get out of that and change the game we look for that clean air, and we think that clean air is the place where it is fundamentally 25 to 54 year old females with kids – and our music format didn’t necessarily marry with that target. It was accidentally far younger than that. So we’ve moved the dial up, and we’re getting some very strong support back from consumers that they do like the transformation, and it is offering them something they’re not ghuetting somewhere else. And as we would describe it internally, it’s what made 2Day FM famous. So we’re returning to those roots you might say.”

The focus, he said, remained squarely on getting 2Day FM breakfast back on track – even though he would not comment on whether it was a mistake for the company to let Kyle & Jackie O go back in 2013, other than to say “it’s not for me to go back and say would I or would I not?”

“I think the opportunity for us moving forth is to improve our Sydney 2day FM performance, specifically through breakfast and I think that is the opportunity that we are spending the most amount of time on in the last number of months and I think we’re up to that challenge, with the addition of Grant [Denyer] and Ed [Kavalee] alongside Em [Rusciano], increased marketing funds to support it, the transition of Hughesy and Kate across to drive which will create a tent pole, hopefully positive effect on that. So I think those things in line with the music revamp, hopefully will unlock that opportunity for us in Sydney,” he said.

Blackley wouldn’t be drawn on any milestones the company would like the reach when the first radio ratings survey comes out on 13 March, but said he was pleased with the decision to bring across Hughesy & Kate to the Hit Network’s drive slot, and noted the good work Mick Molloy and Jane Kennedy were doing in Triple M drive, as well as the positive contributions Wil Anderson was making to Triple M breakfast in Melbourne.

The other major focus for the company, Blackley said, was ensuring SCA had a positive and supportive culture for staff – particularly after former staffer Blake Phillips alleged he had been raped by his manager at the company in 2013.

He said he takes all allegations, including this one, very seriously, and noted the company is willingly co-operating with police investigations. He said the manager in question was ultimately let go because he failed in his duty of care.

“The issue obviously has been recently nominated as being opened up again. We are willingly co-operating with the police – because this is a police investigation at this point. And we did dismiss the manager because we felt at that point in time, there was a lack of his duty of care. We’re not here to focus on fundamentally what did or didn’t happen, but what we did know was he didn’t act appropriately in his duty of care as a manger. And the other allegation is principally between Blake, that person and the police at this point,” he said.

“We’ve spent a lot of time developing a culture at SCA that is a very positive, leading culture. And I think that’s been evident over the last couple of years. If a case comes up for any company, us included, we will deal with it in a very professional manner, but there is nothing that we are aware of, nor concerned about. We are principally focussed on ensuring that the culture of today, and what I can influence, is the best it can be, and fundamentally it’s continuing to move in the right direction.

“And that’s where all our focus is.”


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