SCA CEO Grant Blackey talks regional growth, cost-cutting and radio BVOD

Media business Southern Cross Austereo (SCA) posted its results for the first half of the 2020 financial year yesterday, seeing revenue fall 8.2% and debt rise. But CEO Grant Blackley sounds confident when I speak to him on the phone moments after he’s assured investors that the outlook isn’t all bleak.

The end of 2019 saw big cost-cutting for the business, with upwards of 90 staff given redundancies and broadcast outsourcing, but Blackley’s eyes are firmly on the horizon.

SCA CEO Grant Blackley is confident in the future of audio

SCA has big plans for the future, that much is clear. Blackley couldn’t tell me much about what they were, although he did hint they would form a part of SCA’s ‘B’ transformation, outlined in the results presentation as building new, scaled, profitable and sustainable revenue streams. This will include ‘investing in new technologies’ Blackley tells me and ‘new means of consumption’ and the personalisation of audio.

“The space is currently relatively young, but it’s accelerating rapidly and we know consumers are demanding to receive their audio in a more personalised, on-demand capacity,” Blackley says.

On-demand is a space SCA is very interested in, with Blackley referring to catch-up radio podcasts as the ‘BVOD’ (broadcast video on demand) of radio. SCA has more plans in this space, he says, and that early signs show agencies and advertisers are keen to get involved.

“You will hear from us in the next six months with a couple of products that we will launch which we’re very excited about. It was less than three years that we went into podcasting, we deployed $5.2m worth of capital into PodcastOne and what you’ve seen is a market leading product that is going from strength to strength.”

Blackley says the business is ‘leaning into’ addressable advertising and creating targeted digital audio with an ‘exponential growth’.

“We’ve seen the success [BVOD] has delivered for TV and we think we can emulate that success. We’re going to adopt a lot of the positives and strategies behind PodcastOne and take those across into our catch-up podcasting group, so the buyer will have a single and easy transaction inside the podcasting market.

“We want to lean in and bring more products to market that will excite consumers.”

One of the bright spots in SCA’s H1 reporting was Boomtown and the work the company has done in regional Australia. This is an area Blackley is particularly passionate about and the recent acquisition of Redwave has helped SCA grow its footprint in WA. Regional audiences are ‘loyal’ says Blackley, and the substantial growth the company has seen in regional areas has been very important to the business.

SCA is focused on regional growth in 2020 and beyond

SCA is one of the driving forces behind Boomtown, which draws advertiser attention to regional Australia, and over the next six months SCA is planning to deliver more tools and products which will help further the initiatives goals and make it easier for marketers, advertisers and agencies to connect with Australians in those rural areas.

The expansion of DAB has also further allowed SCA to target harder to reach audiences. SCA is planning more stations over the next 12 months, expanding its DAB output in markets that have less operators, increasing the choice for regional listeners and broadening the market.

SCA, along with Commercial Radio Australia (CRA) and other radio businesses, were part of a team who addressed the federal government in Canberra earlier this month, encouraging more investment in regional radio. Blackley hopes they will see some support in the coming months, particularly due to the role radio can play in times of crisis.

“Whether it’s flooding up north in Townsville or bushfires along the coast, it’s hard to flee your home with a television set. We saw telecommunication signals jammed because of the overload of people wanting data and lots of people came back to radio. It’s a consistent and easy to access platform, so it’s nearly the primary source of information in times of crisis.

“I have offered the government, as we move forward in the roll out of DAB, that we would add, during those times, dedicated stations to update purely on those essential services and that resonated very well with both sides of the senate.

“The commercial radio industry is far larger than the ABC and its footprint so it’s very important that we deliver a local product.”

During his presentation to investors, Blackley said the industry can see improvement on the horizon for ad spend, with the insurance category returning and the banking industry testing the waters for its own return. Cyclically, it’s also about the time of year when the government will begin its spend again, meaning the chance of improved figures for H2.

Blackley isn’t being cocky about the return of the market, he knows there’s a long road ahead of the industry, but green shoots are starting to show. Some of big stories that have made headlines recently – the TPG and Vodafone merger and the closure of Holden – have also given him reason to be positive.

“Further down the road we hope things will come back in a meaningful way. There has been some consolidation allowed within the telco sector and I think whenever we’ve seen consolidation through any cycle of the market we’ve seen players, the incumbents and the new entrants come together and spend more money to grow the market and protect their share. It’s much the same for the auto industry – arguably the industry will still sell the same number of cars, Holden is leaving the market but every one of Holden’s peers would be looking to improve market share.”

The cost-cutting isn’t over for SCA, but Blackley doesn’t think it ever will be. The hard work that was done in 2019 has helped put the business in a good position for the future and while media companies are in a ‘continued evolution’, Blackley says, new technology, better efficiencies and more automation is making it easier to keep costs low and focus on content and performance.

“Keeping an eye on costs will never change, but we have certainly reset our cost base in our most recent efforts.”