BotW: Vinyl Group slips out some late night numbers; How Meta outlasted its local crisis; Audio's big week
Welcome to Best of the Week, kicked off on QF2089 home to Boomtown, and wrapped up this morning in beautiful Sisters Beach, Tasmania.
Today: A treasure trove of info on how Vinyl Group’s media acquisitions have worked out so far; one year on from Meta walking away from news; and how the audio industry’s big week unfolded.
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Big audio dynamite
What a week for audio. The big dogs all reported their financial results. Southern Cross Austereo offloaded the last of its regional television licences, announced that Listnr has turned a profit, and fired Marty Sheargold for being mean about The Matildas. ARN Media’s profit bounced thanks to its Hong Kong outdoor arm. Nine revealed improved numbers for its radio unit. And Antoinette Lattouf’s court case over her Radio Sydney shifts came to an end.
We’ll start with Nine, as its results dropped first. On Tuesday Nine revealed that revenue from its radio arm edged upwards by 2% to $53.6m. However, thanks to cost control, and starting from a low base, profits for Nine Radio were up by 50% to $5.7m for the half.
Given that Nine Radio only reported $8m in profit for the last full year, it feels like a segment that might just be being plumped up for a sale. The organisation has stopped working on moving staff into Nine's North Sydney HQ. Even with the distraction of a Domain bid, could Nine be ready to sell 2GB, 3AW, and the rest of its radio assets? And could Australian Digital Holdings, who’ve just snapped up the SCA licences, be looking to get into radio too?
This week’s half-year and full-year results from SCA and ARN Media also added to a growing sense that the industry actually has now hit bottom, and is maybe even beginning to lift. It feels like a delicate recovery, but one that is on the way.
One year on, it looks like Meta outplayed the local media
I can remember exactly where I was one year ago today. It was inside the goods elevator at the Commonwealth Parliamentary offices in Sydney. That’s how they transport the journalists up for press conferences
Communications minister Michelle Rowland and Treasury minister Stephen Jones had called the event to talk about that day’s announcement from Meta that it would be withdrawing from the local news ecosystem.
The Facebook News tab that nobody used would be removed, and, more meaningfully, Meta would stop doing deals with publishers under the shadow of News Media Bargaining Code designation. Sure enough, come July those deals ended.
Rowland and Jones were adamant that this would not stand.
Those of us at the press conference slunk back into the freight lift under the impression that we were days or weeks from Jones designating Meta under the News Media Bargaining Code. That would mean the platform would be forced to negotiate with local publishers about paying for their content.
And then it went quiet.
Eventually, word emerged that the Labor government didn’t like the Coalition-created News Media Bargaining Code and was working on a new policy.
More than nine months later the News Bargaining Incentive was born instead. As a concept, at least. The policy would see platforms which bring in Australian revenues of at least $250m per year pay a levy unless they offset that by entering commercial deals with news publishers.
In a world where Donald Trump is now using levies to wage economic war even on America’s allies, the policy is not one that looks likely to make it out into the world. And certainly not this side of an election.
What had seemed like growing momentum in tackling the influence of the platforms seems to have been lost. The thing about running an unstoppable, profit generating digital giant is that you can play a longer game than your opponents.
Vinyl Group’s eventful half
The team at Vinyl Group stayed late at the office last night, announcing the completion of the Concrete Playground acquisition at 7.02pm, and posting their half-year accounts to the ASX at 7.55pm. You’d almost think they didn’t want anyone to read it.
That’s the main reason today’s newsletter is late.
First to Concrete Playground.
After adjustments, Vinyl Group handed over $3.28m in cash and $1.5m in shares to buy Concrete Playground, giving a headline price of $4.78m.
That’s roughly 1.2 times Concrete Playground’s $4.1m revenue for 2024.
Last night’s announcement said “The acquisition is forecast to contribute $1.5m in EBITDA following its integration into Vinyl Media.”
If that EBITDA (earnings before interest, taxation, depreciation and amortisation) number is real, Vinyl Group would only have paid just over three times profits, which would be a great multiple to buy a digital company. However, a phrase I seem to use a lot when talking about Vinyl Group is “if that number is real”.
The language around what profit Concrete Playground actually made last year is tricky. In last year’s initial announcement of the deal, the phrase used was that the publication “would contribute a pro-forma EBITDA of approximately $1.5m at completion”.
That will be a number that removes the salary of Concrete Playground founder Rich Fogarty who leaves the business. And it will also be achieved by hopefully adding in some of the savings of being part of a bigger publishing group. Vinyl Media includes Variety Australia, The Brag, Mediaweek, Rolling Stone Australia and the yet-to-relaunch Refinery29 Australia.
Deep within last night’s half-year report, Vinyl discloses that last year’s net profit for Concrete Playground was actually just $112,000. Which suggests Vinyl paid a much more aggressive multiple of 42 times net profit.
There’s more detail to be discovered in Vinyl Group’s half-year accounts.
It discloses that in the first four months that Vinyl owned Mediaweek, the masthead brought in revenue of $494,400, and made a loss of $135,000.
In the first month of owning event company Funkified, that business brought in $8,000 and lost $71,000 (in fairness, December is slow for everyone).
On the tech arm of Vinyl, in the first three months of owning blockchain music product Serenade Sound, the business brought in revenue of $150,000 and made a loss of $84,000.
You may also recall February’s news that Vinyl is in a legal battle with the people who sold it Brag Media for $7.9m, and says financial targets were not hit. It previously disclosed that in the first five months of the acquisition, Brag Media brought in revenue of $3.3m and made a loss after tax of $1.4m.
I’m not saying they swapped the family cow for some magic beans, but I am saying I can smell the blood of an Englishman.
Revenue for Vinyl Group in the last half was $7.6m. But unfortunately it spent $14.4m to get there.
$5.8m of its revenue came from Vinyl’s media arm; $1.8m from its tech arm.
Vinyl reported an after-tax loss of $6.9m. That’s up on the previous year’s loss for the half of $4.7m.
Yet, with Vinyl Group, gravity does not seem to apply. During 2024, the company raised more than $25m by issuing new stock to shareholders. It still has $7.9m in the bank, and a couple of very patient, wealthy shareholders who have so far been willing to come to the party every time the company looks to raise more cash by issuing stock.
There wouldn’t be many loss-making companies on the ASX with half-year revenues of just $7.6m that can also boast a market capitalisation of $159m. Look at plucky little Pureprofile. This week it reported half-year revenue of $29m and EBITDA profit of $3.3m. Yet its market cap it only $49m.
In last night’s note to shareholders, CEO Josh Simons says Vinyl Group is tracking towards annual revenue of $20m.
He also hints of a change of strategy: “While 2024 was defined by rapid change and expansion, 2025 is about optimisation. Our next phase will be centred on scaling profitability, improving margins, and contributing to execute strategic partnerships.” The buying spree is over.
His note also contains a further hint at the efficiencies to come: “As we enter the second half of FY25 and beyond, our attention will move towards building AI-driven publishing products developed by our in-house tech team.”
And there’s a BIG promise from Simons: “With our current trajectory, we expect to highlight a significant decrease in cash burn by the end of the financial year and reach profitability by the end of the calendar year.”
Down on page 12 of the report comes this less cheerful admission: As a result of the net loss for the half year, net operating cash outflows, and the deficiency in working capital as at 31 December 2024, there is a material uncertainty as to whether the Group can continue as a going concern.”
However, it then adds: “The Directors consider that the Group will continue as a going concern.”
Profitable by Christmas? We’ll see.
Time to leave you to your weekend.
If you’d like to hear more from me, do catch up with last night’s edition of MediaLand. Daany Saeed and I were joined by programming guru Craig Bruce to talk about the Marty Sheargold saga; we looked at the place of dirt units in politics; we asked why Jeff Bezos is tightening his hold on the Washington Post’s editorial policy; and we examined former ABC chair Ita Buttrose’s extraordinary attack on managing director David Anderson.
And I also joined the excellent team at Game Changers Radio to talk about the SCA and ARN Media results, along with the Marty Sheargold furore. Last night I dreamed they’d taken the podcast daily. True story.
If you’re in Tasmania, good luck at tonight’s Diemen Awards.
We’ll be back with more next week.
Have a great weekend.
Toodlepip…
Tim Burrowes
Publisher - Unmade + Mumbrella
tim@unmade.media
It’s not unstoppable.