After steadying the ship, Ooh Media moves into the next phase

BY Tim Burrowes

February 19, 2024 10:00

Welcome to a Tuesday update from Unmade. Today: Ooh Media grows revenue but still sees profits fall (depending how you measure them). And the Unmade Index is dragged back below 600 points – yet again.

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Can Ooh Media escape the ad market’s gravitational pull?

Ooh Media boss Cathy O’Connor delivered solid numbers, but what comes next?

There’s both a bear case and a bull case to be made for Ooh Media after yesterday’s full year results.

The pessimists would point out that the company finished the year with less money in the bank, owed more on its loans, and went backwards on overall EBITDA (earnings before interest, taxation, depreciation and amortisation) profits.

The optimists would suggest that having gown revenue, Ooh Media is through the worst after missing out on the City of Sydney contract to QMS which hurt market share; is well positioned for the continuing shift of advertising spend away from television; and has a chance to take a slice of the retail media action too.

Let’s get to those numbers.

Ooh Media’s revenue (the green bars in the chart above) was up in 2023 – from $593m to $633m – despite being in a declining ad market. That was almost up to 2019’s record $650m, which was the last year without Covid in the books.

But those EBITDA profits were down slightly on last year, falling 3% from $288m to $278m. (It’s worth mentioning Ooh Media’s preferred measure in yesterday’s announcement was “adjusted EBITDA” which excludes various accounting factors and was actually up 2%).

Meanwhile, the company finished the year with $32m in the bank, compared to $40m at the beginning.

And Ooh Media currently owes the banks $115m, well up on the $73m it owed a year ago, before it shored up the share price with a stock buyback.

We’re now in the period where CEO Cathy O’Connor – who took home just over $2m last year – will be judged on results. Having joined the company at the beginning of 2021, at the height of Covid, she’s starting her fourth year in charge.

Initially, one of the early themes for O’Connor was Ooh Media sticking to its out-of-home knitting. In 2021, she sold on youth publisher Junkee to RACAT Group (where it’s since been dying a slow death), and in 2022 she sold Ooh’s cafe and licenced venues networks to Motio.

O’Connor now has her own team in place. That includes the key appointment of Paul Sigaloff as chief revenue and growth officer, to replace chief sales officer Tim Murphy, who has since joined QMS.

And earlier this month she announced another appointment which may prove to be more significant than it seemed at the time. Andrew Every, who starts at Ooh Media the day after tomorrow, will be Ooh’s chief strategy and transformation officer. Reporting directly to O’Connor, it’s the sort of high level (and expensive) appointment you don’t make casually.

As this month’s announcement put it: “Every will focus on identifying areas of strategic growth across its core business and adjacent markets to lead the Out of Home industry to a digital first future.”

“Adjacencies” was a word used in yesterday’s investor presentation too. Although it wasn’t a proposition O’Connor accepted when I spoke to her yesterday, my sense is that having narrowed Ooh Media’s focus while the company was in Covid survival mode, that will now widen slightly.

Every was previously with the NRL where he was responsible for strategy and transformation, and before that was with Telstra’s media arm. He also worked at PWC where Adshel was a client.

One of those adjacencies flagged yesterday was ReOoh, the company’s yet-to-be-proven retail media play.

The growth area of retail media is one that every media company wants to be able to claim it has a route into, because it’s a growth story for investors. Retail media got seven mentions in the investor slide deck yesterday.

Ooh Media’s hope in retail media is to find its way into the space by helping second tier retailers build and operate screen networks. Until yesterday’s presentation, I’d assumed the main part of the ReOoh plan was to effectively offer itself as an outsourced sales house to retailers. That part of the plan was downplayed. Instead, ReOoh appears to be more about managing the physical screen hardware as a service to the retailers.

There’s also one other variable this year. The Outdoor Media Association will at some point launch its long awaited, rebooted measurement system MOVE 2.0. If it has the same effect as the launch of MOVE more than a decade ago, it will bring more market share into outdoor. Yesterday O’Connor, an OMA board member, said MOVE 2.0 would launch during 2024, and an announcement on timings should follow in the next month or two.

If it’s all going to come together for Ooh Media, this is the year. So far, I’m still with the bulls.

Declaration of interest: I own stock in Ooh Media via my super fund.

Unmade Index slips back below 600

The Unmade Index has once again fallen below 600 points, marking a 40% fall on its 1000-point opening at the start of 2022.

The index, which tracks Australia’s listed media and marketing stocks, lost 0.36% yesterday, its fifth consecutive trading day of falls.

At the top end of town, Domain’s fall of 1.51% also pulled down majority owner Nine, which lost more than 1%. Nine is close to falling below a $3bn market capitalisation.

Meanwhile, Seven West Media lost another 2%, taking it close to its lowest point since 2020.

Ooh Media outperformed the market, rising by more than 3% as investors treated its full year numbers as a solid result.