Listnr vs iHeart: The fight for the future of audio
The country's two top radio companies have diametrically opposed approaches to digital audio: SCA's homegrown Listnr and ARN's borrowed iHeart. Both are building momentum, but can both succeed over the long term? The CEOs speak to Mumbrella.
“I think Listnr’s a remarkable story”, John Kelly says of the digital audio platform SCA has built from scratch and brought to profitability in under four years.
As CEO of Southern Cross Austereo, he is pleased about numerous things when he speaks to Mumbrella — not least that SCA can now truthfully be referred to as an ‘audio company’, having finally shed the last of its regional TV assets.
But it is the success of Listnr which Kelly really wants to talk about.
Listnr launched in 2021, after three years in development. It replaced the company’s nascent on-demand audio platform PodcastOne — a branding partnership with a US company of the same name — and consolidated its streaming radio player and growing podcast library. It also allowed for licensing deals with outside publishers.
The platform finally broke even in the second half of 2024. It even made SCA money, albeit only just: $100k in EBITDA (earnings before interest, tax, depreciation and amortisation) on revenue of $22.1m for the six months.
John Kelly
“I think it’s remarkable,” Kelly says of Listnr’s rapid growth. “It launched in March ’21, it’s been profitable in four years. Which is [good] for any digital media start-up.”
Listnr’s revenues for full-year 2024 were $42 million, up 48% from the prior calendar year.
“We have the highest revenues of the local players by some distance, and we’re growing double the market.”
Data from the Australian Podcast Tracker shows that in January, listeners and downloads for shows either made or sold in the Australian market by Listnr were neck and neck with iHeart (see graphic below). Note that listener numbers are not de-duplicated, meaning that total listener counts double-count individuals listening to more than one publisher podcast.
Kelly expects the market to react well to Listnr’s rise.
“I think that the investment marketplace will say, ‘Hey, now it’s in profit, how big could it be?’
“It’s already 10%, or thereabouts, of our revenue and really growing – at very strong double digits.”
Despite the ability to access third-party content through the app, the Listnr platform remains rather insular – Kelly said, in terms of listening hours, around 70% is SCA’s own represented radio station content, either live streaming, or catch-up podcasts.
The downside of the owned-and-operated Listnr model is the substantial ongoing cost of maintenance and development. SCA’s accounts show $16.4m in non-revenue related costs attributed to Listnr for the past six months.
Listnr’s listeners, over the years.
This is not a problem shared by ARN’s iHeart.
ARN’s CEO Ciaran Davis is blunt when asked if he ever looked at Listnr’s rapid growth and wondered if perhaps building an asset, rather than licensing one, would have been the smarter long-term play.
“No, absolutely not,” he says.
“I mean, I think the benefits we get from a low CapEx model through iHeart is: access to leading tech that is capable of competing with other global tech operators, a product that is, from a CX perspective, is extensive and has a massive catalog of content that we can monetise and we can add to if we want.”
What makes iHeart so much cheaper is that ARN has opted not to build its own platform, instead locking in a long term licensing deal with iHeartMedia — the largest radio network in the US.
In doing so, ARN inherits a proven technology stack, a swathe of splashy international content that neatly aligns with their own radio output, and frees up funds to strike deals with third-party content networks. It made multi-year deals with BBC Studios and The Athletic in December.
Interestingly, ARN’s digital audio play “became EBITDA and cashflow positive” at exactly the same time as Listnr, during the final six months of 2024. The company promised in their full-year financials, issued last week, that this is “set to continue in 2025.”
The company posted 28% year-on-year growth “in direct sold digital products” in calendar year 2024, which it claims — much like SCA — is “almost double the market growth across the same period.”
Ciaran Davis
“When we do upgrades, and iHeart do upgrades, we’re on the same roadmap. So the integration isn’t as delayed, and we’re able to provide much smarter, more sophisticated products to the market faster. All that for a license fee, which I think is really, really good.”
It’s a compelling argument. But, as with any licensing agreement, it is only as strong as the contract. And any future contract is only as strong as the relationships between the companies.
“We have a fantastic relationship with the guys in the US,” he says. “When you think about capital and shareholder money, I believe it’s actually better spent to get the best product the cheapest way – and then use that to monetise more, and be able to invest more in driving commercial outcomes.”
Figuring out which strategy is working best is difficult. Both platforms became profitable for the first time in the first half of 2024. When it comes to building audiences, it’s also neck and neck (see numbers above).
One thing likely to shake up the marketplace in the short term is ARN’s promise of a $40 million cost-out program which will allow the company to “transition into a fully digitised audio business” over the next three years.
“It’s a total transformation of what we’re looking at from an operating model perspective, from an investment perspective,” Davis explains.
“Ultimately what we’d like to do is — if you look at where the market is going in terms of total audio around broadcast, streaming, podcasting — 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 the transition into a fully digitised audio business will involve exploring the use of artificial intelligence to make broadcast radio processes “smarter, better, faster, quicker”, and a reshuffling of the company’s internal operating model.
“We need to look at technology – and how it can help us be a smarter business.”
Davis promises he will reveal more about its cost-out program — including the specific financial aims — midway through 2025.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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So much spin from Davis, and anyone in the industry or close enough to ARN simply don’t buy it. Nathan, you’re a strong journo – push harder for the truth to be uncovered and stop the BS spin!
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Under the current circumstances, I think SCA would be ecstatic that they have a home grown, fully controlled streaming platform, that competes well with the big boys. On the other side of the fence, the slow motion iHeart media trainwreck, must (should) be keeping some awake at night. My suspicion is, that if iHeart is to survive, it’s going to be forced to slash costs and significantly raise licence fees from its ‘partners’. It’s financiers won’t accept ongoing US$1B losses every year, for too long.
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Davis’ spin is a bit like being told that renting a house for the rest of your life is a better investment than buying or building.
Looking at this, LiSTNR turns a profit in 4 years, it’s taken ARN 10 years with IHeart, and they still have no asset to show for it.
There will come a time when ARN’s leasing fee will be equivalent or higher than SCA’s capex on owning their own asset. And then the “in hindsight” view will kick in when ARN realise they are now 10 years behind.
In every growth metric, SCA/LiSTNR is already leaving ARN/Iheart behind.
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Anyone that has followed the iHeart parent company saga closely, will know their history & current financial situation.
Nuff said on that..
As for LisTNR, I am really impressed that the local platform is doing so well with such a limited Capex/Opex. Kudos to SCA on that front 👌
I actually suspect SCAs current share price, and potential sale price, is severely undervaluing this jewel in its portfolio.
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98% of ARN and Listnr podcast listening would be via Spotify or Apple Podcasts so in terms of tech and apps what does it really matter?
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First up EBITDA is NOT a measure of profitability it is a measure of cashflow
Second, Davis spin is getting tired, old and boring. Licensing agreement v SCA owned asset – no shareholder value from ARN. How much money does he have to lose for Shareholders before the Board moves him on
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As has been stated @dataguy, 70% consumption on the platform is live streaming or catchup podcasts.
For a ‘dataguy’ you’re not that great at reading the data that has already already been presented to you!
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