97.3 rakes in the cash
97.3 Brisbane, operated by ARN but jointly owned by ARN and Nova Entertainment, has been a ratings success since launch, and now we can outline how that has translated into revenue over the years; and it is impressive.
In CY14 97.3 had an operating margin of an unheard of 50.2%, delivering EBITDA of $14.7m.
Bob Peters runs the ruler across the figures in his report below.
Not only does 97.3FM currently have Brisbane’s largest audiences, revenues and profits, but there is also compelling evidence supporting the view that the station has been metropolitan radio’s best and most consistent financial performer over the past decade.
In calendar year 2014 (CY2014) the station grew sales revenues by 15.9% to $29.3 million and increased operating profits by an even larger 21.3% to $14.7 million, thereby generating a record 50.2% operating margin.
Although a handful of other metro radio stations, most of which operate in the larger Sydney and Melbourne markets, have generated larger annual revenues and/or profits at times over the past 10 years, none are likely to have bettered 97.3FM’s steady financial performance over that period in terms of both consistent revenue and profit growth and the maintenance of high and still-improving profit margins.
The station’s financial credentials are extremely impressive. For example, since it commenced broadcasting:
- The station has been profitable since its first full year of operation in CY2002;
- Sales revenues and operating profits have increased in every year except one since CY2002;
- Since its first full year of operation, sales revenues and operating profits have increased at compound annual growth rates (CAGRs) of 10.4% and 15.9% respectively; and
- Over the past five years, the station has generated an average annual operating profit margin of 49.0%.
Historic Highlights and Ratings Performance
Station 97.3FM holds Brisbane’s third commercial FM radio licence which was purchased for $67.0 million at an auction conducted by the Australian Communications and Media Authority (ACMA) in May 2001 by a joint venture company equally owned by the Australian Radio Network (ARN) and Nova Entertainment (Nova) as it is now known. The station is managed by ARN.
As it operated from co-located facilities with AM station 4KQ, which was and remains wholly owned by ARN, 97.3FM was able to fast-track its broadcasting launch and thus was on the air by 26 September 2001.
The station enjoyed early ratings success and by the first survey of CY2002 it was Brisbane’s third highest rating radio station with an 11.8% 10+ audience share , which placed it only slightly behind the market’s then #2 rating station, 4MMM, which held a 12.6% share.
Since that time, 97.3FM has always been a high rating station in the Brisbane market although it has only been in more recent years that it has been the regular market ratings leader.
The station has been the sole or equal top rating 10+ station in 23 of the last 30 surveys which have occurred in Brisbane since the start of 2012, as well as being the average annual top-rating 10+ station between CY2012 and CY 2014 and also during FY2014 and FY2015.
During its 13 full years of operation between CY2002 and CY2014, 97.3FM’s total revenues increased at an above average compound annual rate of growth of 10.4%, while the station managed to limit increases in total operating expenses to a lesser 6.9% CAGR.
Consequently, operating profit (EBITDA) margins rose fairly steadily from 28.2% in CY2002 up to a record 50.2% in CY2014. There were only four years over the past 13 when the station was unable to improve all of its profit margins.
Selling and Marketing accounted for 67.5% of all operating expenses in CY2014, followed by Broadcasting (16.5%); General & Administration (13.4%) and Other (2.6%). Across those four expense categories, Personnel Costs accounted for 25.7% of total operating expenses.
Interestingly, Personnel Costs’ share of total opex declined over each of the past three calendar years, as employment-related costs increased at a lesser rate than all other operating expenses in aggregate.
Current Year Prospects
Based on year-to-date trends, 97.3FM appears to be on track to generate another record financial performance in CY2015, since market advertising revenues have experienced solid growth since the start of CY2015 and the station has managed to increase its commercial rating share in FY2015.
Another record breaking year would give further support to the claim that 97.3FM has been metro radio’s best and most consistent financial performer over the past decade or more.