COVID’s impact on SCA has been ‘severe’, but it says it’s ready to bounce back

Southern Cross Austereo (SCA) has admitted to its shareholders that the most recent financial year was “difficult”, but said the company has stabilised under its new leaner operating model.

At its Annual General Meeting, SCA noted the combined effects of the COVID-19 pandemic, Government restrictions, low business and consumer confidence, and weak advertising market had taken their toll.

SCA also noted its loss of market share in the metro radio market compounded its problems. The wider market fell 20.2% across the financial year to June 30, however SCA’s decline in radio revenue was more stark – 25.3%.

Regional radio revenues for SCA were down by 13.1% on 2019’s figures.

Revenues from digital audio streaming and podcasting doubled, but still sat at just $7.1 million.

Despite the poor results, SCA said it is now well-positioned to deal with the industry’s changes and challenges.

Chairman Rob Murray said the company’s transformation had set it up for success.

“At last year’s AGM, we spoke about the strategic imperative to increase our investment in smart audio consumed through internet-enabled devices to protect and expand our audiences. Our commitment to that strategy remains and is reinforced by growing consumption of digital audio during the pandemic,” he said.

“With Australia’s largest portfolio of homegrown audio assets, including 99 FM, AM and DAB+ radio stations available on broadcast and by internet livestream as well as Australia’s leading premium commercial podcast network in PodcastOne Australia, SCA is well-positioned to lead Australia’s growing digital audio industry.”

CEO Grant Blackley also noted COVID-19’s “severe” impact on the business between March and June.

He did, however, predict that the pandemic had accelerated consumer trends “that will play to our strengths and strategy”.

Blackley: Our commitment to localism is important. 

“Consumption of audio has grown strongly during the year. This is because audio is more accessible than ever through internet-enabled devices such as mobile phones, tablets, desktop computers and smart speakers. SCA’s suite of radio stations, radio podcasts, original podcasts and smart news updates is available on all these devices,” he assured shareholders.

And despite moving its Hit Network to state-based regional Breakfast shows, rather than individual shows for individual local markets, Blackley said its “commitment to localism” was equally important to the company as “creating compelling content” that appeals to its core.

“Creating compelling content that is expertly curated will continue to be at our core – whether our audiences listen to our linear broadcast, our digital livestreams, or our digital on-demand podcasts and news updates. Equally important is our commitment to localism. Our Triple M and Hit network radio stations are strongly connected to their cities, towns, and communities. PodcastOne Australia curates and produces original podcasts that tell Australian stories,” he said.

The company also revealed it will shortly take its new 2Day FM Breakfast show in Sydney to market.

Blackley said the business was buoyed by consumer listening habits across digital audio, live streaming and smart speakers and would now convert these trends into commercial outcomes.

Financially, SCA will continue to receive the JobKeeper subsidy for eligible staff wages until January 3, 2021. Blackley said, however, that the company is unlikely to qualify beyond this date.

He predicted revenue for the quarter ending December 31, 2020 will be down 10% to 15%, “a substantial improvement compared to the previous two quarters as media markets progressively improve”.