ARN announces $40m in cutbacks amid market concerns over Sandilands
Radio giant ARN will rip out $40 million in costs over the next three years as it strives for growth in its Australian operations.
In its full-year 2024 results call, ARN revealed flat revenue and forecast “low single-digit growth” in 2025. In the subsequent question time, one investor demanded to know what would happen if star presenters Kyle Sandilands or Jackie Henderson were knocked out by illness.
Sandilands went public about a brain aneurysm earlier this year, saying to his critics: “You may get your wish. I may be dead.” He and Henderson signed a $200m 10-year contract with ARN in 2023.
CEO Ciaran Davis dismissed these fears to Mumbrella on Thursday morning, shortly after getting off the line with investors.
“We’re obviously very supportive of Kyle, and I’m glad that he hasn’t had to go for an operation, to be honest,” Davis said
“He’s looking after himself, which is great. I also think it’s very brave of him to talk openly, as he does on air, about the whole experience.”
The company’s local operations — excluding Hong Kong outdoor operation Cody — were relatively stable, with advertising revenues up just $900k for the year, to $307.9 million, with EBITDA down by $1.4 million on 2023.
Metro revenues were back 3%, impacted by a loss of the crucial 25-54 ratings on the Gold network, however digital audio revenues of $25.3 million were the company’s saving grace, up 28%, and lifting Australian operations to positive earnings in the second half of the year.
Total costs before significant items of $241.3 million rose by 1%, primarily due to “higher revenue share costs following the increase in podcast revenue.”
Davis isn’t concerned Sandilands’ on-air frankness about his illness will cause the market to get cold feet.
“He’s absolutely stated his intention to stay on air,” Davis confirmed. “There’s no immediate plans to step away. He’s focusing on his health, but in the meantime, he’s on air doing good shows.”
Davis refused to be drawn on the breakdown of the $40 million in cost cuts.
“It’s across the board, to be honest,” Davis said. “I mean, it’s a total transformation of what we’re looking at from an operating model perspective … we need to and want to be able to make investments in the key areas around content, in distribution, and in the monetisation of it.”
Davis said he has spent the last six-to-eight months in planning.
“Looking at the model, looking at the trajectory, looking at other media organisations around the world, and how they’re focused and positioned themselves.”
Davis refused to answer whether the $6.5 million in cuts shown in the 2024 results were part of the $40m total.
“We don’t have all the details yet in terms of what the actual cost-out program looks like,” he said. “We’ll update the market towards half-year results in August this year.”
The focus on digital is working for the company. In H2 2024, ARN’s digital audio segments turned a profit for the first time, while ARN delivered 28% year-on-year growth in direct sold digital products – which Davis notes was “almost double the market growth” across the same period.
ARN’s iHeart platform accounted for 273 million downloads and delivered 590 million ads to audiences.
ARN Media chairman, Hamish McLennan, said during the investor call the transformation program will position ARN as “the most profitable audio business in Australia.”
“Our strategic priorities are clear – create a digitised audio business that leverages technology and AI to simplify the operating model and create efficiencies; to grow audiences by expanding reach and launching new innovative formats; and position ARN as the leading ‘All Audio’ commercial platform connecting brands with over 10 million listeners across broadcast, streaming and podcast assets.”
Cody Outdoor, ARN’s Hong Kong-based advertising arm is also on target to be cash flow positive in 2025, as revenue at KMB bus body and Trams continues to build.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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I think SCA has created a far more sustainable and profitable audio ecosystem than ARN. The fact that SCA own their own platform, have the lion share of digital audio revenues – pacing at a substantial premium to iHeart/ARN, and have a digital stack of global recognition places SCA well in front. Not sure ARN has ever been profitable on their partnership with iHeart since 2013!
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