ARN chair stands by rationale for Southern Cross play, reveals $5m cost
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More news: ARN chairman Hamish McLennan said the company’s leadership team was pained to part with the $5 million cost of its failed pursuit of Southern Cross Media last year but continues to make the case for consolidation.
McLennan said global companies, particularly social media platforms, are killing Australian media companies that pay significant amounts of tax locally. He said the federal government desperately needs to relax media ownership laws to allow local media companies to consolidate in order to compete with Spotify and other global media firms.
What they said: “We like Southern Cross and we just think bulking up and having one company that can syndicate content, get efficiencies and drive costs out of the business is really important,” McLennan told the company’s shareholders on Thursday morning.
“I will also say that we were very disappointed in the engagement we got from Southern Cross, and it kills us that we had to pay that money … $5 million [is] a lot of money. We wear that, we own it, and it's really painful for us.”
ARN flags ‘significant’ progress on $40m cost-cutting plan
The news: ARN Media has told investors that total revenue in the year to April is about 2% behind the prior comparative period in a trading update ahead of the company’s annual general meeting.
The context: The ASX-listed radio company — home to the Kyle and Jackie O Show, the Gold Network, the iHeart digital audio platform and Hong Kong-based advertising business Cody — said it had made “significant progress” on a targeted $40 million in cost cuts over three years.
ARN said it expects to deliver improved radio revenue share into the second half as a result of ratings improvements in the year to date, amid the ongoing transition to a new commercial team.
The company said it has also seen modest improvement in its gross margins in the period to date, driven by the company’s product mix and pricing.
Overall costs are to be skewed to the first half due to the front-loading of certain operating costs associated with savings realised in the second half, the company said. It continues to target flat people and operating costs in 2025.
The numbers: ARN Media, in a presentation to investors, reported statutory group revenue of $365.6 million for the previous year, up 9% on the year before. Underlying earnings before interest, taxes, depreciation and amortisation was $93.1 million, up 30%. ARN issued a final dividend of 1.1 cents per share.
What they said: “A comprehensive review of the whole business has taken place and all expenditures and processes examined to ensure we leave no stone unturned. Even our proposed change of auditors today is a reflection of the scrutinising being undertaken,” CEO Ciaran Davis said in a prepared address to shareholders.
“This transformation underscores our commitment to drive shareholder value and will focus on three areas: digitising and simplified operating model; investing to growing audiences and engagement; [and] delivering total audio commercial solutions.
“To help execute this transformation, we are partnering with a global specialist to take over delivery of several core operational functions — finance, technology, and media services — allowing us to introduce smarter tools, reduce complexity, and scale efficiently.”
The source: ASX announcement
