SCA revenue drops 8.2% as debt rises
Group revenue for Southern Cross Austereo (SCA) dropped 8.2% for the first half of the 2020 financial year, falling to $308.1m from $335.7m for the same period the year prior.
The results, which are in line with the trading update provided by the business in late 2019, also see its debt increase by 12.0%, largely due to the acquisition of Redwave Media, which has grown SCA’s national footprint to 96 stations. Redwave is expected to add a revenue of $2m in the second half of FY20.
SCA’s H1 FY20 results [Click to enlarge]
That figure relates to the redundancies undertaken by the media business towards the end of 2019, which saw upwards of 90 staffers let go in a bid to streamline the company’s costs. Shareholders will receive an interim dividend of 2.75 cps, fully franked.
Regional advertising faired better than metro markets, driven partly by the Boomtown initiative. Podcasting was also a highlight for the business – its Podcast One platform saw revenue growth and is set to achieve cashflow breakeven. Digital audio revenues grew 140%.
The financial stability measures taken by the business, including the review of its cost base and its debt refinancing, should reflect positively on the second half of the financial year and has seen certainty of funding through to the end of 2022. The cost review included the restructure and savings in labour.
SCA revenue results for H1 FY20 [Click to enlarge]
SCA CEO Grant Blackley said: “SCA is Australia’s largest audio group, owning and operating 96 FM, AM, and DAB+ radio stations around Australia. Audio remains an attractive platform for audiences and advertisers and is well-positioned to benefit from improvements in media markets. Total average audiences for metro radio grew in 2019, while average time spent listening remained stable.
“Consumption of digital audio is growing strongly, providing opportunities for growing revenue through premium addressable advertising. With an aggregated commercial reach of over 3m monthly users, SCA offers advertisers scaled and simple solutions to target consumer interests, behaviours and passions.
“Podcast One Australia continues to be Australia’s leading commercial podcast network, providing advertisers with premium access to audiences who are highly engaged with our creators and their areas of interest. SCA’s catch-up radio podcasts are the BVOD (broadcast video on demand) of radio, with more than 450,000 signed-in unique and addressable users. In addition, SCA enjoys exclusive Australian representation of Sound Cloud – an open, digital audio platform fostering new talent and connecting advertisers to younger fans of new and emerging music and culture.
“SCA’s strategy has two clear pathways. We will ensure our core business is resilient, effective and efficient at delivering compelling content for our audiences and demonstrable positive returns for our advertisers and other business partners. At the same time, we will invest in developing new on-demand and personalised audio products to build profitable and sustainable revenue streams for the future.”
SCA is reporting time spent listening remains stable across its radio audiences and that current tough conditions are simply a result of the “market experiencing a cyclical weakness” and that “audio assets are well positioned for market improvement”.
Total cumulative audiences grew across 2019, while time spent listening dropped only slightly from 2018. Metro advertising revenues contracted 13.2% while regional revenues dropped 5.7%.
Audiences at SCA – cume vs time spent listening [click to enlarge]
For the rest of the year, SCA predicts ad markets will remain challenging, but is predicting some recovering in Q2 – largely led by the insurance and banking segments after both experienced a weak 2019. Local and federal governments are expected to resume their spending in the latter half also.
It looks like SCA’s profits have really taken a HIT.
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Boomtown did NOT increase regional revenue – it was actually the regional sales staff busting themselves to make budget – after they have had their contracts “revised” twice in 18 months. This resulted in heavily reduced commissions to the point where many were writing big amounts and only taking home meager commissions… Dozens of long term sales staff have exited as many were earning less now than they were 5-6 years ago BUT writing more revenue… very sad.
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More cost cutting me thinks….staff!!!
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You must be good with a hammer Terry, you nailed it.
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