A $4.3m bill for the stalled SCA takeover but ARN Media isn't giving up the chase
A $4.3m bill for the stalled SCA takeover but ARN Media isn't giving up the chase
Welcome to end-of-week analysis from Unmade. Today: We dig into ARN Media’s market update. The hunt for SCA is still on.
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SCA takeover (and monetising banana bread recipes) still on the menu for ARN Media
Considering it was only a half yearly update, ARN Media’s results drew a lot of interest yesterday. The investment market wanted to find out what the company’s leadership is thinking about its hunt for Southern Cross Austereo. What became clear is that it’s not over yet. CEO Ciaran Davis and chairman Hamish McLennan are not giving up Here are nine takeouts:
ARN Media’s bill for the failed takeover bid for Southern Cross Austereo was $4.3m. So far.
ARN Media hasn’t dropped the idea. “We remain resolute in our view that the combination of SCA’s Triple M brand, regional and digital assets with ARN Media, would create Australia’s most valuable audio led entertainment business,” the directors report said. On a slide listing ARN’s three priorities over the remaining months of this financial half, SCA was third, alongside running ARN’s radio business and its Hong Kong outdoor advertising company Cody.
ARN has not yet locked in a new partner in a bid although Davis referenced inbound interest. Which seems like a polite way of saying Australian Community Media proprietor Antony Catalano is trying to insert himself in to the conversation
Davis says The K+J Show will now build cume in Melbourne Despite there being no early breakthrough in the ratings, The Kyle & Jackie O Show’s Melbourne launch is still a key part of the networking strategy. ARN emphasised the lift in the show’s cumulative reach from 851,000 in Sydney to 1.2m across both cities. ARN has so far spent around $3m on marketing the show’s Melbourne launch. According to Davis: “We are very confident in the strategy and ability of our team to make this move a success although like all new shows it will take time to build a loyal audience. Brand tracking results demonstrate a steady increase in conversion from awareness through to trial which we expect will translate to cumulative audience in the coming months.”
There will be another $10m in cuts across ARN Media, representing more than 5% of the company’s cost base.
The actual numbers were a little better than I’d been anticipating. Metro radio was down 2.5% in the half. Regional was up 15.3% (the Boomtown marketing effect?) and digital streaming was up 34%. Overall, audio revenues were up 1%.
The company was keen to talk about how (like SCA’s Listnr) it will soon no longer be losing money on its digital efforts. That’s a change of tone. I don’t recall ARN previously acknowledging it was losing money on digital - instead emphasising that unlike SCA it was able to piggyback on its iHeart affiliation to outsource most of its tech costs.
Speaking of iHeart, the company will soon tap into a new AI-driven capability referred to by Davis in his presentation to analysts as “conversational targetability” of podcasts. AI will transcribe and tag everything being said in podcasts. Got a supermarket ad for bananas? The tech would be able to place it alongside Jonesy & Amanda discussing banana bread recipes. We’ll aim to look at that more in the coming weeks.
The ARN Media stock price slumped. It closed yesterday down by nearly 10%. That was mainly, I suspect, down to the decision to slash the size of the shareholder dividend from 3.5 cents per share to 1.2 cents this year.
Unmade Index lifts
The Unmade Index recovered slightly on Thursday, up 0.3% from Wednesday’s all-time low to land on 464.5 points.
ARN Media had the worst of it yesterday. The market also marked down Southern Cross Austereo - which reports its annual results next week - by 1.7%. Investors will be waiting to see whether SCA follows ARN Media and slashes its dividend.
Meanwhile, Enero bounced back by more than 8% after hitting a four-year low earlier in. the week.
Time to leave you to your Friday. If you’re thinking of entering the REmade Awards, don’t forget that the price goes up after today. You have just under 15 hours.
I’ll be back tomorrow with Best of the Week.
Have a great day.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media
