For the 1600 staff employed by SCA around Australia, there would have been some hope that last week’s AGM might have given guidance on their job security into 2024. Would the chairman or the CEO tell predators ARN and Anchorage Capital there would be no sale?
Commentary on whether SCA would recommend the takeover offer would also have interested the advertisers who fund the 99 radio licences, thousands of podcast episodes and regional TV signals from 10, Seven and Nine
Instead, what they got from chair Rob Murray in his initial address was, well, nothing. Murray did admit the two parties had been talking. Trying to read between the lines you can’t help but get the feeling that the board is ready to roll over, maybe if they could just get a few more dollars.
Rob Murray. Top: John Kelly
See also: “Complex and highly conditional”: SCA address takeover bid at AGM
Murray said: “Our financial and legal advisers have held initial discussions with the Consortium’s advisers…[but] we remain at an early stage and there is nothing further we can tell you today.”
Later in the AGM Murray was drilled further about the sale and how much SCA might be worth. “We can’t put a dollar value on it, but we believe [the value] is well above we [the share price] is today.”
When pushed again about the value, Murray added: “When considering fair value, there are several things that need to be considered including the health of the advertising market.”
Murray seemed to indicate there could well be a deal to be done, but not quite as quickly as the current predators were hoping for. ARN was hoping for a deal by December. Murray: “That is too optimistic and we won’t be rushed.”
Questions probing the board for more information came from a number of familiar AGM voices including Crikey founder turned shareholder advocate Stephen Mayne and former CCZ Equities director Roger Coleman. Mayne asked about the links between ARN and News Corp, noting that there was a conflict of interest given that News Corp executive chairman Lachlan Murdoch owns Nova Entertainment.
Coleman unloaded on the board, claiming they lacked media sector experience and that the board needed to be overhauled with fresh blood.
Another question asked if the board had engaged with ACMA (“A question for ARN,” said Murray) and what was the state of an SCA bid to sign Kyle and Jackie O (“We won’t speculate about talent,” said Murray).
SCA staff cuts to continue?
New chief executive John Kelly has a lot on his plate. Apart from facing the company being broken up and sold off for spare parts, the board needs him to make the place more profitable.
His statement at the AGM outlined his quandary. He realises the importance of localism, but understands that networking will help him meet budget-cut targets.
John Kelly on live and local
“I am a champion of our Proudly National, Fiercely Local mantra. As the world becomes more global and more digital, our connections to local communities become ever more important. Put simply, localism is the antidote to globalism. Our 1,600 people – located across the length and breadth of Australia – live, work, play, and actively contribute to their local communities. Our radio and digital audio content is relevant to those local communities, and our advertising services support thousands of local businesses.”
SCA has to slash costs
Without detailing how, Kelly outlined the financial challenge facing the company: “We will reduce our annualised cost base by more than $15 million, with net savings of more than $10 million to be realised in the current financial year. Most of these savings will be realised in the second half, and we expect total cost growth will be below CPI for the full year.”
Staff attrition
Fewer breakfast shows, particularly in regional Australia, and fewer staff in metro stations, is one way to meet the cost target.
We detailed here last week recent programming initiatives which will have some impact on costs.
In addition to farewells at Sea FM on the Gold Coast on Friday (see separate story), there were also limited redundancies at the end of last week at Triple M.
See also: Axed radio stars Bianca Dye and Ben Hannant farewell fans as SCA shutters Sea FM show
Executive performance payments slashed
Murray also told the AGM: “Considering that [SCA] corporate financial outcomes fell short of targets and the significant deterioration in SCA’s share price during the year, the board exercised discretion to reduce the awards of all leadership executives to between 20 percent and 50 percent of their respective opportunities.
“Under our Executive Incentive Plan, half of each executive’s award (and 40 percent of the CEO’s award) have been paid in cash. The remainder has been settled by grant of equity performance rights that will be eligible for vesting after 30 June 2025, strongly aligning executives’ interests with those of other shareholders. Members of the executive team who resigned during the year received their cash entitlements but have forfeited their performance rights.”