ARN Media has delivered its half year financial results – the first major report since cutting the HT&E name.
ARN’s strong audience ratings performance continued, with the brand reporting its position as top network for metro AM/FM stations in Australia in four of the last five surveys. ARN are also reporting that their monthly average podcast listening increased 23% to 6.6 million people.
Advertising revenues were impacted by reduced consumer spend and a slowing economy, partly offset by growth in digital audio revenues. Additionally, Government spend was significantly down year on year following the 2022 Federal Election.
On a statutory basis, ARN Group revenues from ordinary activities of $165.9 million decreased $6.1 million on the prior period and EBITDA of $35.5 million was down 27%.
Net profit after tax attributable to shareholders before significant items (NPAT) was $14.6 million.
Despite continued domestic inflationary pressures, Group operating costs were limited to 2% in the period.
ARN Media Half-Year Results: The Details
• Radio advertising revenues were impacted by reduced consumer spend, slowing of the economy, and the significant downturn of Government spend.
• On a statutory basis, ARN Group revenues from ordinary activities of $165.9 million decreased $6.1 million on the prior period.
• Delivered $2 million of $5 million annual national revenue synergies targeted; building on the $7 million growth in 2022; Gaining share in key markets.
• Digital audio advertising revenues reached $8.8 million, up 37%, targeting cashflow break even run-rate by end 2024.
• iHeartRadio platform continues to grow, up 12%, with more than 2.5 million registrations.
• Balance sheet remains strong with net debt of $52.4 million and leverage of 0.8 times EBITDA.
• Group operating costs limited to +2% in the period despite key integration projects being implemented and nearline completion.
• Received proceeds from Soprano sale totalling $66.3 million.
• Acquired a 14.8% interest in SCA for $38.3 million – a long term strategic investment in an undervalued sector with ~10% yield.
• Declared half year fully franked dividend of 3.5 cps; ~10% effective yield.
• Accretive share buy-back maintained delivering improved returns for shareholders.
• Q3 radio revenues pacing in line with prior comparative period following above market performance in July. Briefing activity suggests a similar trajectory into the final quarter.
• H2 digital audio revenues are pacing to +25% year on year.
ARN Media chairman, Hamish McLennan said: “ARN has delivered a good result in a highly competitive market against a backdrop of reduced consumer spend, a slowing economy and a reduction in government spend, which has impacted revenues.
“The strength of audio is undeniable as both radio and podcast listening continues to grow. We continue to have the number one metropolitan network in Australia with our newly integrated regional network performing strongly as advertisers increasingly pay attention to audio in regional Australia. Importantly, the final components of the regional integration with our metropolitan network are on-track for completion in 2023.
“We are strong believers in the future of the sector reflecting our decision in June to acquire a 14.8% interest in Southern Cross Austereo for $38.3 million – a business we know well in a sector that is undervalued, positioning ourselves for future value creation”.
ARN Media CEO and managing director, Ciaran Davis, said: “We are seeing increasingly positive trends in all of our audio measurement metrics. Metro commercial radio audiences continue to grow in listener numbers, in key day part listening and the amount of content consumed, with the latest industry survey showing 82% of the metro population aged 10 years and older listened to radio in the past 7 days, which is an extraordinary indicator of the power of audio.
“Our regional network continues to deliver over 147 localised shows, more than any other Australian audio broadcaster, and our leadership in podcasting resulted in a significant lift in digital audio advertising spend, making it the fastest growing category of all general display advertising.
“ARN Media is seeing improved revenue conditions in quarter 3 after gaining market
share in July and we are confident our ‘All Audio’ strategy will deliver a strong and integrated audio business for listeners and clients.”
Metro
• ARN Metropolitan advertising revenues in the period were down 7%, impacted by a slowing of the economy and reduced advertising spend.
• Metro commercial radio audiences continue to grow, with an additional 298,000 people listening in 2023 compared to 2022.
Regional
ARN Regional was acquired in January 2022 from Grant Broadcasters, with 46 stations across 26 markets, with the final components of the systems integration on-track for completion in 2023.
• Advertising revenues totalled $52.2 million, down 4%, significantly impacted by reduced
government advertising spend.
• ARN stations featured in five of the regional surveys in 2023, achieving a number of strong
• Delivered $2 million of $5 million annual national revenue synergies targeted; building on the $7 million growth in 2022 and gaining share in key competitive markets.
• Within range of the 2023 synergy target and acquisition business case.
Digital Audio
• Digital audio advertising spend in Australia grew 13% during March 2023 quarter compared with the prior period and was the fastest growing category of all general display advertising.
• ARN digital audio advertising revenues up 37% to $8.8 million.
• Targeting cashflow break even run-rate by the end of 2024.
Cody (HK Outdoor)
• Cody Outdoor revenues and EBITDA finished down 5% and 14% respectively. On a like basis, adjusted for the loss of the HK Tramways contract in May 2022, revenues were up 30% on the prior period.
• Cody Outdoor was unsuccessful in retaining the Western Harbour Tunnel advertising contract on completion of the current contract in August 2023. The contract contributed approximately 50% of total advertising revenues of the business. ARN is undertaking a strategic review but remain focused on minimising operating cashflow requirements.
Trading Update
• Q3 radio revenues pacing in line with prior comparative period following above market performance in July. Briefing activity suggests a similar trajectory into the final quarter.
H2 digital audio revenues are pacing to +25% year on year.
• Total ARN people & operating costs in challenging market conditions remain on track to finish near flat yoy (in line with May guidance).
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Top Image: Ciaran Davis