SCA back on top

May 06, 2025

Welcome to a midweek update from Unmade. Today: The tectonic plates shift again in the radio industry, as Southern Cross Austereo is once again worth more than ARN Media.

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SCA versus ARN:

Just under a decade ago, Mumbrella published a piece examining the state of Australia’s listed media companies.

Reading it today feels a little like opening one of those buried time capsules. There are a lot of vanished names and changed fortunes.

Fairfax Media was worth $2.3bn on the ASX, and had just passed the landmark of its Domain real estate division being more profitable than its metro mastheads the Sydney Morning Herald and The Age. Later, Domain floated in its own right, where it is now worth $2.7bn. And Fairfax Media no longer exists after a takeover-merger from Nine which these days has a combined value of $2.3bn.

Seven West Media’s market cap was $1.2bn. Today it’s worth only just over $200m.

Others have vanished altogether. Prime Media (then worth $90m) was swallowed by Seven West Media. APN Outdoor, worth $870m, was later sold to JCDecaux for $1.2bn. Macquarie Media, owner of 2GB and 3AW, was worth $170m. It was later bought out by Nine after the Fairfax merger. Today the speculation is that Nine would sell its entire radio division for $40m to $50m.

Ooh Media’s market cap was $725m. That was before it bought Adshel. Today the company’s worth $860m.

Which brings me on to the two main listed radio players.

Southern Cross Austereo was worth $1.1bn.

And APN News & Media was worth $737m. Two rebrands later, that’s the company now known as ARN Media.

A few years later, in April 2021, came a seismic moment when SCA’s share price sank faster, and ARN became the bigger company.

Yesterday, after months of the gap closing, SCA finally returned to the top after four years in second place.

SCA CEO John Kelly has steered the company back into first place

When the market closed last night, SCA was worth $176m, up by 6.5% for the day, while ARN was worth $166m, down 5.4% for the day.

Fittingly, it occurred on the day SCA announced that after a messy process, it has a binding deal to sell its remaining TV licences to Seven. The circumstances that saw Digital Group Holdings almost pick them up before failing to complete are still somewhat unclear, although clearly somewhat acrimonious.

Seven always seemed the more logical owner, to complete its national network.

SCA’s share price jump wasn’t because of the sale to SWM for a relatively paltry $3.75m, which was less than it would have got from DGH. It was at more in reaction to a profit update that followed a few minutes later suggesting improved financial performance for the business. SCA shareholders will start receiving dividends again.

Both SCA and ARN have been making deep cuts

Strategically just as important when the TV deal completes at the end of next month, SCA will be the country’s only pure play audio company. ARN Media isn’t quite there; it also owns half of creative agency Emotive and outdoor advertising firm Cody in Hong Kong.

And the reason for ARN’s fall in price will also be tied around similar sentiment. Audio isn’t quite a zero sum game, but it’s likely that much of SCA’s improved performance has come from squeezing ARN’s market share, not least while the expensive plan to roll out the Kyle & Jackie O Show nationally across ARN’s Kiis network continues to misfire.

Just 18 months ago, ARN kicked off a takeover bid for SCA. Now it looks more like the prey than the predator.

Declaration of interest: Through my self managed super fund, I have shares in almost all the companies listed on the Unmade Index including SCA and ARN. I bought another $1,000 more shares in SCA about a month ago. That was a reinvestment of half year dividends from my wider portfolio. My criteria was to buy a single media stock which had both good management and was most undervalued. Overall, my investment in SCA has grown by 12%, while I’ve lost 42% on ARN to date.