The first set of numbers since the merger of Southern Cross Media Group and Seven West Media landed yesterday.
The new media monolith recorded a 17% drop in profit, even as the group reported diverging fortunes across its portfolio.
For Chairman Heith Mackay-Cruise, the message is less about defending a 17% dip and more about momentum. For CEO John Kelly, it’s about integration at pace.
For shareholders, it might be time to strap on those helmets, because despite the merger being just 49 days in, the training wheels have well and truly been torn off.
When asked by Mediaweek about the company’s decision to part ways with former CEO Jeff Howard a day before releasing its half-year results, Mackay-Cruise was bullish in his reply: “We have a very robust strategy with regards to the bringing together of two amazing media companies to create the largest multimedia platform in Australia.”
Jeff Howard.
A frustrating market
Mackay-Cruise is pragmatic about the headline number – a 17% fall in profit – highlighting industry-wide soft advertising conditions, combined with rising interest rates.
“The media sector is facing a very frustrating economic environment,” he explained.
“When the RBA increases interest rates, that puts the handbrake on consumer sentiment, and that flows through to advertising dollars. And we’re seeing that in a very shortened market at the moment.”
Mackay-Cruise went on to say that while revenue was down overall, the “green shoots” were clear in the group’s audience performance, with television, audio and digital products delivering the highest audience shares the company has recorded.
Digital as the growth engine
Barely seven weeks into the job, Kelly sounds energised rather than cautious, telling Mediaweek he is “more excited today” than when the deal first began, pointing to the opportunities ahead, particularly in digital.
He pointed to the scale differential between platforms, saying, “The reality is there’s 15 million signups in 7plus, only 2.5 million in LiSTNR,” and described the potential to “cross-pollinate not only the signups, but the activity on platforms” as “massive.”
Kelly added that digital assets will “clearly be the growth engine of the company moving forward.”
The radio executive was quick to remind media and shareholders he is not a one-trick pony, telling Morningstar Australia’s Director of Equity Research, Brian Han, during the earnings call that he brings three decades of media experience to the role, including 17 years at Network 10 across operations, strategy and finance.
“I guess I have the benefit, I’ve got 30 years in media, but probably people don’t understand. I’ve spent 17 years at 10 in both operations, strategy and finance roles,” Kelly said, adding that he understands “cost, cost efficiencies” and “how to target cash flow returns.”
Streaming surging
Seven’s streaming service 7plus delivered double-digit revenue growth in the half, while LiSTNR posted revenue growth and positive EBITDA, reinforcing management’s view that digital is the group’s long-term growth engine, even if it does not yet fully offset the earnings weight of linear television.
For his part, Mackay-Cruise is pushing back on any suggestion that broadcast is obsolete.
“There is no question that consumer behaviour is changing,” he said, noting that during the Bondi terror attack more viewers turned to the main TV news programmes on 7, 9 and ABC “than at any other time.”
He added that this highlights “the importance of actually having quality journalism” underpinning news and current affairs, describing it as the “source of truth” and arguing, “you can’t get that source of truth from the technology platform in a social media sense.”
Going bush
The strategic logic of the merger becomes even clearer in regional Australia.
As Mackay-Cruise explained, the group’s “coverage of regional and rural Australia is second to none,” with 73% of regional radio listeners and a 46% share of regional television.
The combined footprint spans every regional, rural and remote market, “more so in some markets than the ABC”, giving the business what he described as “complete coverage of Australia from a messaging perspective.”
Mackay-Cruise is also quick to point out that the reach is not just about the audience, but also revenue.
He pointed to the strength of Seven’s broadcast and print assets in Western Australia, such as The Nightly, alongside SCA’s radio network, describing the combined footprint as “amazing.”
For advertisers, the real upside sits in cross-selling: SCA has 8,000 clients, but only 2,000 currently advertise with Seven. That leaves 6,000 potential customers who can now be offered a one-stop shop across television, radio, print and digital.
Future facing
The commercial opportunity may be front of mind, but the cost line is just as pressing.
The merged group has flagged $30 million in cost savings over the next year amid soft advertising conditions.
Mackay-Cruise was direct about what that entails.
“In an industry with cyclical headwinds, and naturally we have a significant cost base that does include people.”
He added: “We will not stand still, and we will be agile, and we’ll be focused on accelerating the execution of our agreed strategy to get the right benefits for all of our stakeholders.”
In plain terms, further restructuring is on the table.
The first result shows growth in audiences and digital revenue, but continued earnings pressure, particularly in linear television. The next phase is about delivery: realising merger synergies, removing costs, and demonstrating that scale across 25–54s, strength in regional markets, and an integrated audio, video, and digital sales model can convert into sustained profit growth in a tight advertising market.
Main image: Heith Mackay-Cruise, and John Kelly. Source: SCA