Southern Cross Austereo’s leaner model sees half year profit lift despite revenue drop

Revenue was down 16% to $259m, yet earnings rose 11% to $75m which turned into a net profit of $32m

Radio, podcast, regional TV and digital publisher Southern Cross Austereo has released its financial results from the six months ending December 31, 2020.

Revenue was down 16% to $259m, yet earnings rose 11% to $75m which turned into a net profit of $32m, an improvement of 59% on the six months to December 2019 of $20m.

The company pointed to a leaner operating model and a JobKeeper payment of $32m as reasons for the lift.

Audio revenue of $173.3m was 17.8% lower than in H1 FY20. The impacts of Covid on metro radio markets were offset by growth of 6.8% in national regional radio revenue as SCA continued to benefit from the Boomtown trade marketing initiative and relatively favourable economic indicators in regional markets.

Television markets recovered more quickly than radio markets, with Southern Cross Austereo television revenues of $84.9m down by 11.7% on H1 FY20.

Southern Cross Austereo CEO Grant Blackley said: “We are pleased to report EBITDA for the half of $75.3m, which was 11.5% ahead of the prior year. NPAT grew by 59.3% to $32.5m off the back of a leaner operating model and historically low debt levels. This has strengthened our balance sheet and provides confidence to invest in new organic products and services to optimise audience and revenue outcomes.

“Advertising markets are continuing to improve towards pre-Covid levels as the economy recovers and government restrictions stabilise and ease. Our Q3 revenue is forecast to be between 6% and 8% below the prior corresponding period while costs for the full year will reflect the benefits of work done over the past few years to restructure our business. Capex for the full year is expected to be $15 million.

We are reaping the benefits of the steps taken to streamline our television business in recent years. With a higher proportion of variable revenue-related costs and significantly reduced employee costs in the period, our television EBITDA was $19.5m 38% higher than in the prior corresponding period. Our EBITDA margin of 23% compared well to 14.7% in the prior corresponding period. Some of these employee cost savings will reverse in the second half, as temporary Covid-related measures unwind.

“We have revitalised key Southern Cross Austereo breakfast radio shows, led by The Morning Crew with Hughesy, Ed and Erin on 2DAY FM in Sydney, The Marty Sheargold Show on Triple M Melbourne, and Basil, Xav & Jenna on our new Triple M station in Perth. This investment is critical to unlocking higher audiences, revenue and earnings.”

See also: SCA’s Grant Blackley on ambition of LiSTNR app and PodcastOne rebrand

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