SCA’s audio gains wiped out by Seven’s performance
Heith Mackay-Cruise is now the chair of SCA, following a short stint from Seven's Kerry Stokes
Video killed the radio star in the first half-yearly results presentation for the newly merged Southern Cross Austereo and Seven West Media, as a strong six months in audio were more than wiped out by Seven’s lacklustre performance.
The combined group posted revenue of $792.2 million, representing a 2.7% drop. EBITDA of $66.9m was down 28.7%, while net profit after tax fell by 42.2% to $21.9m.
“Due to the merger, we have a complex set of results”, SCA’s chief transformation officer Toby Potter said during the company’s earnings call on Tuesday morning. Notably absent during the call was former Seven boss, and SCA’s recently appointed CEO and MD Jeff Howard, who stood down last night ahead of the earnings call.
In contrast to the overall financial results, SCA’s audio business is in rude health.
EBITDA rose by 17.5% to $28.4m, up by $4.2m.
Net profits from continuing operations are up by $1.2m — or 191% — from a loss of $1.4m, which was due to costs from rival ARN’s unsuccessful takeover of the company in the last half of calendar year 2024.
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Broadcast radio revenue grew by $3.7m to $191.3m, a modest 2% rise that bucked the overall decline in the sector. EBITDA was up by 15.1% to $52.7m.
Metro radio revenue grew by $600,000 year-on-year, despite the overall market declining by 7%. This is due to an increased market share, from 27.5% in FYH1 to 29.8%.
SCA’s Listnr platform saw revenue leap by $3.1m to $25.2m, a 14% increase.
Digital EBITDA grew from $100,000 in the first half of FY25 to $2.8m.
Just three years ago, during the first half of FY23, the company was posting a $10.1m loss in digital EBITDA, highlighting the quick growth to profitability for the Listnr app.
Earlier this month, Seven posted its worst-ever first-half EBITDA of $67m, down by 27% ($25 million) on the same period a year earlier.
Overall revenue was down 2.1% ($15 million) to $712m, while operating costs rose to $645m, sitting $60m higher than the company’s TV advertising revenue for the period.
Seven’s publishing business “The West” suffered a 5% EBITDA drop to $14 million, with revenue down 2% to $84m.
Seven is also responsible for the majority of the merged company’s $338.2m debt, contributing $277.4m compared to SCA’s $60.8m.
Seven has brought a lot of debt to the merged entity
On Monday evening, SCA informed the market that former Seven boss Jeff Howard would stand down as CEO and MD of the merger company. It appointed Scott Butterworth as chief financial officer, with acting-CFO Toby Potter moving to chief transformation officer.
During the earnings call, Southern Cross Media chairman Heith Mackay-Cruise said the company is “targeting further savings in television to help offset the decline, and so far has identified $20 million in new initiatives for implementation in this second half.”
This will, no doubt, mean redundancies.
John Kelly, who was announced yesterday as the interim CEO for the group, elaborated on this later in the presentation.
“My ambition is to work with our teams to, as quickly as possible, have a look at all our assets, whether it be content, whether it be sales, whether it be back of house, and work out how we can get efficiencies across the entire group, whether it be print, digital, audio or TV.”
Audio revenues are expected to be “broadly flat” for the current quarter, while TV revenue will be down 2-3%, which Mackay-Cruise blames on Nine having the Winter Olympics.
For the full year, the company is forecasting EBITDA to be in the range of $200 million to $220 million, a fall from its $233 million in FY25.
Despite Seven’s current woes, Mackay-Cruise identified a potential growth area.
Responding to an investor question about how Listnr will counter the explosion of video podcasts on other platforms without another costly round of capital expenditure to redevelop the app, Mackay-Cruise said: “We’re very excited about using [streaming video platform] 7plus as potentially a video distribution tool moving forward, which, with 15 million signed-up viewers … that’s a huge opportunity to expand our 2.5m signup base for Listnr.”
“So, exciting times ahead for us, and we’ll certainly take advantage of those video podcast trends.”
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I bought about $700 of Seven shares for a laugh a few years ago, which was down to about $180 at the end of last year. I was very upset they were automatically sold when the merger happened because my holding was too small. Now I’m ecstatic as it saved me from complete annihilation!
None of us saw that coming 🤣