There's nothing normal about what's happening to Australian media stocks
Welcome to a midweek edition of Unmade, after another landmark day in the decline of Australia’s media companies.
Unmade’s paying members were first to get this post, on Tuesday night. Everybody else had to wait until Wednesday morning.
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Did you know live-streamed radio listening in cars has risen by 75% in two years? And that Australia leads the world in podcast growth with a 20% increase in listenership? Discover these insights and more at the Infinite Dial 2024 Webinar, presented by CRA. Join us on Wednesday, 3 July at 11 AM Eastern for a 30-minute session exploring trends in Australian audio.
Our expert panel includes Larry Rosin from Edison Research, Lucy Formosa Morgan of Magna Australia, Abi Wallis from SCAiQ, Nicole Bence of Nova Entertainment, and Jo Dick from CRA, hosted by Tim Burrowes from Unmade.
Are you in Adelaide or Melbourne?
I’m back on the road shortly, to Adelaide and Melbourne. I’d love to catch up with anyone in the industry who’d like to do so.
I’m in Melbourne on Monday June 24, and in Adelaide on Tuesday and Wednesday June 25 and 26.
If you’d like to grab a coffee, please email me at tim@unmade.media.
Use it or lose it time for marketers, as Australian media sinks
Yesterday, eight of the 14 ASX-listed media and marketing stocks that make up the Unmade Index hit some new type of low.
In the case of ARN Media (down another 2.68%) and Southern Cross Austereo (down 1.39%), they were historic lows since the two companies listed in 2005 and 1999 respectively.
Meanwhile Nine (down 1.43%); Seven West Media and The Market (down 6.45%) are trading at levels only seen during the first panicky days of the 2020 Covid crash.
Ooh Media (down 2.14%), Enero Group (down 2.74%) and Pureprofile (down 5.26%) yesterday all hit their lowest points since 2023.
In the day-to-day, stocks go up and down, but this seemingly complete loss of belief in the media and marketing sector by the local investment community is extraordinary and unprecedented.
Over the last two-and-a-half years The Unmade Index - which tracks the valuation of every locally listed media and marketing stock - has lost 52% of its value. Yesterday it fell below 480 points for the first time.
That crash is sector specific - it’s not a wider business phenomenon. Over the same period, the ASX All Ordinaries, which represents Australia’s top 300 stocks, has grown by about 3%.
For people who work in the listed companies, daily performance on the ASX can seem far removed from what’s going on in the office.
But the reality of a share price is it represents the cumulative wisdom of the market on what a company is worth. That’s mainly based on the backwards looking data of a company’s previous profits, and more importantly a calculation on its ability to deliver profits and pay dividends to shareholders in the future.
That’s how those at the top of the company are incentivised - most of their bonuses are linked to moving the share price. And when revenue is going backwards, the only way to improve the profit number is to cut costs. That’s why share prices often jump when job cuts are announced.
However, the market capitalisation of these companies has fallen even further than their profits have.
This suggests that in the short term, the market correctly expects a terrible set of numbers for the end of the financial year. The monthly media agency spend numbers from SMI Guideline have already pointed towards that. In April, the market went backwards by another 5.6% year-on-year.
But more worryingly, it says that the analysts see only further long term decline ahead, beyond the advertising cycle.
Much of that is rational. Advertising dollars are still moving across from legacy media to the platforms, with video ad inventory in the next wave as Amazon Prime and Paramount Plus ad tiers come online and Netflix gets its act together.
But another factor must be a disappearance of belief in the management at some of these companies, and their addiction to infighting.
Seven’s credibility was hammered by its decision to provide a year of accommodation to rapist Bruce Lehrmann while he was suing Ten for defamation, and proprietor Kerry Stokes’ decision to fund a defamation case against Nine newspapers by war criminal Ben Roberts-Smith.
Nine’s leadership saga is far from over, despite the departure of Peter Costello over the weekend. On Tuesday evening, Capital Brief posted claims that new chair Catherine West applied pressure to the Sydney Morning Herald to change its reporting of board divisions back in 2020. There are also previously reported questions about how much West knew about the newsroom culture at Nine which is now the source of an external investigation.
And at the small end of town, the goings on at what was then known as The Market Herald and is now The Market Ltd were unedifying to say the least.
Any outside investor might reasonably conclude that when it comes to governance, Australia’s media is still in the wild west. Which would be unfair to the many professional board execs on several of the media boards, but that’s not how the pack invests.
There is also one other group who need to decide whether they want to step up: marketers and their media agencies.
Brands chase advertising effectiveness, and that includes the attractions of price and attribution that the platforms offer.
Advertising based on context has gone out of fashion.
Bu the risk for marketers is that unless they consciously shift some of their budgets back towards the legacy media, then much of it will whither away. Allowing that media option to disappear is not in advertisers’ interests either. But if they do not support it, that’s what will happen. It’s occuring already.
If marketers value the ability to advertise with professionally produced media, then it’s time to use it. Or lose it.
Time to leave you. We’ll be back with more on Thursday morning, with an audio-led edition in which we explore programmatic advertising fraud.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media