SCA boss Grant Blackley: It’s not necessary to build scale through acquisition

Southern Cross Austereo CEO Grant Blackley does not see a “necessity” to build scale through acquisition, but noted the company was always open conversations around potential mergers and takeovers.

Blackley, whose company owns Hit Network and Triple M network as well as regional TV and radio stations, said the company was “comfortable” with its position in market, and would remain focused on all of its current assets.

Blackley said he did not see a necessity to build scale through acquisition

“We are always open to a conversation as we should be but in fairness we are spending the majority of our time focused on building and monetising the business to the optimal level and if an opportunistic approach presents itself across any media set we will often engage in that conversion. But it has to be good to shareholders,” Blackley told Mumbrella.

His comments come amid widespread change in the Australian media industry. One month ago, Nine announced a proposed merger with major publisher Fairfax Media, while today, the Australian Competition and Consumer Commission approved the mergers of Ooh Media and Adshel, and JCDecaux and APN Outdoor respectively.

But Blackley, who said he didn’t think the potential merger of Nine and Fairfax Media would impact his company, is more focused on his business and its current assets.

Earlier this year, SCA merged its metro and regional operations, which has since led to a number of restructures.

For fiscal year 2018, SCA reported revenue decline of 5.3% to $654m and earnings before interest, tax, depreciation and amortisation (EBITDA) of $154.7m, down 12.8%. Net profit after tax (NPAT) was down 98.7% year on year, to $1.4m.

Despite this, Blackley is pleased with the results, particularly in the second half.

“We are seeing metro audience and metro revenue up in the second half and most importantly accelerating into the fourth quarter. We are seeing a very stable environment within regional radio which continues to perform and this is our seventh consecutive year of growth,” he said.

“In regional TV, we’ve also bucked the trend and seen revenue growth against the backdrop of a market that has been adverse.”

But his major challenge still remains with Hit Network’s Sydney station, 2DayFM, which never quite recovered from the departure of long-standing breakfast hosts, Kyle Sandilands and Jackie ‘O’ Henderson at the end of 2013.

Em, Grant and Ed have been on air since January this year

This year, the show introduced a new breakfast lineup with Ed Kavalee, Em Rusciano and Grant Denyer – the 9th, 10th, 11th hosts respectively. It also changed its music format.

The first survey of the radio ratings year signalled it was a positive change. The share climbed by 0.6 points to 3.4%. By survey three the share had climbed to 5.6%, but in the last survey, the show slipped 0.6 share points, taking it back to 4.3%.

Today, Blackley said the first nine months of the financial year “didn’t perform as well” as he would’ve liked, but overall he is “pleased” with 2DayFM’s progress.

“We have put more focus and investment into our metro assets led by Sydney on the Hit network. After we got survey one, which is in March, we actually started to naturally witness an improvement in ratings, we saw that continue into survey two three and four. You are starting to see positive momentum and we are starting to see our performance improve,” he said.

“That performance has gone up by 5% in audience by the way. The other most important ingredient to understand is that we launched our digital stack strategy around the same time, the first of March. It is the first monetisation path to selling our digital radio assets.”

However he added the company will “continue to tweak certain aspects of the delivery”.

“We not only changed and tweaked some of the panel and the talent we had but importantly we also changed the music and the music strategy which moved up about 10 years in age in terms of the style of music we are airing.

“We’ll continue as we do everyday to tweak certain aspects of the delivery but we are very comfortable with the trajectory of what we are seeing in Sydney.”

On the topic of monetisation, Blackley mentioned the company was “well on track” to monetise podcasting platform, Podcastone. 

“There is a deeper appreciation within agencies and advertisers that podcasting is a platform that is now a buyable platform and I don’t think that existed 12 months ago. We are in the early stages of creating awareness and acceptance in the market that this is a viable platform.

“It is now and we are engaging with more advertisers and agencies every day and we are putting more people on the ground to access that inquiry. The path will start to accelerate more than anything and the tide will rise.”

But, he admitted, it was harder to monetise SCA’s venture into outdoor advertising in partnership with QIC. This time last year, SCA announced it had invested in out of home solutions for shopping centre, Mall Media.

“The Mall Media model we closed down on June 30 which we announced on the call. We closed down that trial which was with QIC because we couldn’t see a clear path to monetisation and profitability,” he said.

“That operated for some months but between ourselves and QIC we didn’t think that that venture would meet the expectations of either party so we effectively closed that down and it hasn’t therefore moved into part of our focus for the year ahead,” he said.

Regardless, Blackley still wouldn’t decipher whether SCA would be a buyer or a seller.

“We can straddle both actually,” he said.

“If someone presents an attractive proposition to us that we think marries with the strategy and is positive for our shareholders, we’ll look into the opportunity. If someone feels they would like to acquire us, we’ll wait to see the offer and evaluate it accordingly.”


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