ARN AGM offers update on SCA radio takeover proposal

Australian Radio Network (ARN) have held their AGM held today, May 14 2024. It gives additional details of the regional and provincial radio stations ARN hopes to obtain or offload in the new indicative offer to SCA now that Anchorage Capital Partners have pulled out. I also spared a thought to those responsible for the significant revisions to these details over the last four days.

Outside of ARN wanting the Triple M branded stations and LiSTNR, they also wish to gain both Canberra’s Hit 104.7 and Mix 106.3 (the only Hit branded station for ARN – the New SCA would keep the rest) but doesn’t want Mix 94.5 Perth. It looks like SCA would gain from ARN Power 100 in Townsville, 91.1 Hot FM on the Sunshine Coast and Power 98.1 in the Hunter Valley. ARN wants none of SCA’s television interests which appear to have been a reason the consortium with Anchorage broke down.

ARN CEO and Managing Director Ciaran Davis (pictured) addressed the meeting saying:

“Kyle & Jackie O launched in Melbourne on April 29th on KIIS 101.1 and is off to a fantastic start. Melbourne, at $220 million in 2023, is a more valuable radio advertising market than Sydney and combined represent over 62% of the metro radio market.
Historically KIIS 101.1 hasn’t performed as well as KIIS 1065 in Sydney from an audience perspective.
This naturally impacts commercial share and our modelling suggests a significant advertising share growth opportunity over time with audience and ranking improvement.
A lot of preparation has gone into the launch, supported by a large marketing campaign that has just been rolled out, and we are confident in its success based on the some of the early proof points we already have:
• Streaming KIIS 101.1 is up 63%
• K&J Podcast listeners in Victoria is up 48%
• We’ve seen a 95% growth in unique users to our websites” 

The last part, nearly double the growth heading to the websites, means that people are going looking for Kyle and Jackie O. That’s a marketing campaign that’s working.

Chairman Hamish McLennan provided these additional details in his address to the changing nature of the indicative proposal to SCA:

“As announced to the ASX yesterday, ARN intends to engage with SCA on a revised proposal to preserve this compelling opportunity for ARN and SCA shareholders. Under this revised proposal, ARN would acquire the same radio assets, and assume
100% ownership of the combined digital audio assets of ARN and SCA.
SCA shareholders would receive up to 0.870 ARN shares for each SCA share. They would also retain their shareholding in SCA, or in a newly listed demerged entity, that would hold the radio and television assets previously expected to be acquired by
Anchorage.
ARN is also willing to work with SCA to explore any alternative proposals it may receive that provide greater value or cash certainty for SCA shareholders. This includes any alternative proposals from a third party acquiring New SCA’s Radio or Regional TV assets, on a combined or separated basis.
ARN remains committed to delivering an attractive and certain outcome to SCA shareholders. ARN is prepared to work with SCA to review the ARN and SCA transaction perimeters to optimise the outcome for both sets of shareholders.”

With all the above the financial results for ARN got less attention that perhaps they normally might at an AGM. A broad overview was a stable broadcast market, increasing audience particularly in digital audio streaming and podcasting, April YTD advertising revenues were positive at +1% and, including digital audio revenues, +40% vs. PCP.