Why Seven may be the real winner as SCA revenue falls 4.5%

Southern Cross Media Group has reported a 4.5% fall in pro forma revenue to $1.87 billion for FY26, but its first full-year result as a merged business has provided early signs of the rationale behind its deal with Seven West Media.

EBITDA excluding onerous contracts fell 15.8% to $191.9 million, while reported net profit after tax dropped 57.6% to $9.9 million. Costs were reduced 3.1% to $1.68 billion.

Television took the biggest hit, with revenue falling 6.6% to $1.25 billion. However, that compared with a 9.9% contraction in the wider TV advertising market, while Seven's revenue share increased 1.2 percentage points to 41.6%.

Chief financial officer Scott Butterworth said on the company's earnings call: “Television suffered the most from the decline in the market during the year. However, while the market was down 9.9%, TV's revenue decline was restricted to 6.6%, reflecting a record 42.5% audience share in a non-Olympics year, and revenue share up 1.2 percentage points to 41.6%.”

Digital television revenue grew 10.6%, with Butterworth pointing to 7plus as another positive.

“Pleasingly, Seven Plus became Australia's fastest-growing BBOD service during the year, reflecting a full-year benefit of AFL programming on the platform.”

Audio provides the upside

Audio was the group's strongest-performing division, with revenue increasing 1.4% to $429.9 million and EBITDA rising 15.5% to $100.4 million despite the metro radio advertising market falling 6.8%.

Digital audio revenue increased 14.3%, more than offsetting the decline in broadcast radio revenue for the first time.

“The number I draw your attention to is digital. Audio digital revenue grew 14.3%, and for the first time, its growth has more than offset the decline in broadcast. That crossover is the thing we have been building LiSTNR for,” Butterworth said.

Across SCA, digital revenue increased 10.7% to $320.3 million.

Merger begins to deliver

The result is the first full-year set of numbers for the combined SCA and Seven West Media business, bringing Seven's television, streaming and publishing assets together with SCA's Hit, Triple M and LiSTNR operations.

The early numbers provide some evidence of the strategic rationale behind the deal. SCA has delivered $30 million in annualised merger synergies a year ahead of schedule and is now targeting between $145 million and $150 million in annualised savings, including those synergies.

The combination also provides greater diversification from the television advertising downturn. While TV EBITDA fell 32.3%, audio EBITDA increased 15.5%, while digital revenue grew across television, audio and publishing.

There remains considerable cross-selling potential. SCA said 38% of its audience both listens to SCA and watches Seven, while just 14% of advertisers currently buy across both.

Lund points to stronger July

SCA said early FY27 trading had improved, with television revenue tracking roughly flat year-on-year despite the wider market remaining down.

Managing director and chief executive officer Rohan Lund said: “Television revenue is tracking roughly flat year-on-year, and pleasingly, July is slightly up, which is a positive way to enter the year.”

“The market itself we understand is down mid-single digits, but we've been offsetting that with stronger share gains again, and with help from the very successful Commonwealth Games, audio revenue in the first quarter is tracking up low single digits, and publishing revenue is also holding steady year on year. It's been a very strong start in July.”

SCA said the advertising market remained “short and volatile”, with its expanded cost reduction program continuing through FY27.