HT&E now worth more on the ASX than SCA

The parent company of the Australian Radio Network (ARN) – known on the ASX as Here, There & Everywhere (HT&E) – now has a higher market capitalisation than rival Southern Cross Austereo (SCA).

Ahead of the market opening this morning, HT&E’s market capitalisation was $503.12 million, while SCA (SXL on the ASX) was down to $480.87 million.

The milestone has caught the attention of market observers due to the differences in size and scale between the two companies – SCA’s 99 radio stations and television interests far outstrip HT&E’s assets.

Both companies have taken a hit in recent years in terms of value, however the impact on SCA has been much more severe. At the end of 2017, SCA’s market capitalisation was $911.28 million, meaning in just over three years its value has declined by over 47%.

HT&E, meanwhile, at the conclusion of 2017 had a market capitalisation of $580.75 million, so today’s value is down just over 13%.

Over the past year, HT&E has been undertaking a share buyback, a generally accepted method of boosting shareholder returns, improving financial ratios or helping to up the share price.

HT&E has also been simplifying its portfolio, selling its outdoor street furniture business Adshel to Ooh Media in 2018 for $570 million.

In 2019, it closed down Techly and Lost at E Minor as it folded Conversant Media into ARN, and then sold The Roar to Athletes Voice later in the year. That same year, it closed its esports business Gfinity.

In addition to its radio networks – KIIS, The Pure Gold Network and The Edge – ARN also has a 50% share in Perth’s Nova 93.7FM in a joint venture with NOVA Entertainment, and owns 50% of Canberra FM Radio (Hit 104.7 and Mix 106.3) in a JV with SCA.

It also has a 51% controlling interest in creative agency Emotive and still has out-of-home interests in Asia with Cody.

HT&E’s strategy in recent years has been to increasingly focus on its audio assets and talk up the power of traditional radio. It’s also flagged increased attention for its iHeartRadio brand, which it has licensed through until 2036. It has noted the potential for global partnerships with the digital audio brand.

SCA, meanwhile, has the Hit and Triple M Networks as well as regional television licences.

A vast majority of its revenue comes from its audio operations. At its half-year results, revenue for the first half of the 2021 financial year was $259.2 million – $173.3 million of which was from audio.

SCA has increasingly been throwing its investment and future behind the LiSTNR platform, which it said now sits at the centre of the business. SCA’s CEO Grant Blackley has repeatedly flagged extensive investment in the platform as well as the talent which will front it. He’s also spoken about his lofty plans for the platform, and noted its local creation and ownership, unlike ARN’s arrangement with iHeart.

Despite the company’s focus on radio and digital audio, it did suffer a blow in March, when Nine announced to the ASX it would not extend its current regional television affiliation agreement with SCA.

The current deal expires on June 30, 2021.

SCA is expected to now sign a deal with Network 10 in which the TV network will supply programs for broadcast into regional Queensland, southern New South Wales and regional Victoria where SCA holds the commercial TV licences.

10’s ratings and revenues are significantly lower than that of the Nine Network though, which effectively gives SCA fewer opportunities to monetise the content and brings down the value of its TV operations.

In the year to date, SCA’s share price has peaked at $2.58 (February 16) and this week has been as low as $1.82. HT&E peaked at a similar time, at $2.10 on February 17. It hit lows of $1.65 a couple of times in March.

Both companies tapped into the Federal Government’s JobKeeper subsidy and had staff on reduced hours and pay. They returned to full pay last year.

Read more: LiSTNR vs iHeart: Has SCA’s move reset the market?

JobKeeper, executives’ salaries and pay cuts: What you may have missed in radio’s annual reports

Profits for ARN’s parent HT&E down 52%, but company says it has emerged ‘stronger’ from pandemic

SCA audio revenues fall 18%, but company’s profit improves almost 60%

Ciaran Davis says honesty and transparency helped ARN navigate the pandemic

Grant Blackley on JobKeeper, staff cuts and having LiSTNR at the ‘centre’ of SCA