ARN’s Hamish McLennan: “We’re encouraged by the progress we’ve made”

In the immortal words of Hamish McLennan this morning: “Media is not for the faint hearted.”

At today’s Annual General Meeting – the ARN Chairman admitted the company is not happy with the position in which it now finds itself. He did, however, stress that that ARN Media remains financially sound.

ARN Media reported that revenue fell 10% to $285 million in the year to December.

McLennan said the media industry is undergoing a profound technological and cultural shift, with advances in data, automation, AI and digital distribution all reshaping how audiences engage with content.

“Despite the pace of change, broader macro-economic headwinds and ongoing softness in the advertising market, the Board is encouraged by the progress we have made against the company’s strategic priorities.”

McLennan said as a result, ARN’s balance sheet has been materially strengthened. Net debt has reduced, its facilities have been refinanced, liquidity headroom remains robust and cash generation remains strong.

Over the past 12 months, ARN reduced its net debt by $25 million, underpinned by the underlying cash performance of the business and disciplined capital management.

McLennan said ARN remains financially sound – cash generative, well-funded, and positioned with the balance sheet strength and liquidity required to deliver long-term value for shareholders.

He was challenged on these points by shareholder David Kingston, who asked various questions about the decrease in shareholder value.

Asked why it was taking so long to sell the Cody Outdoor business, McLennan said the company sees it as a non core asset and will do its best to get value from the sale, but would not give more details because negotiations are underway.

Kingston also pointed out that, in his opinion, the valuations of the company’s radio licences were “excessive” and “flying in the face of [market] reality.” The company will reasses these values again in June in its six monthly accounting review.

Asked about the “three biggest mistakes” of the board by Kingston, McLennan replied, “I accept my responsibility as chair… if we get our strategy right we will improve…”

Hamish McLennan intends to “willingly” increase his shareholding in the company with the acquisition of $500,000 worth of additional shares, to show his commitment to the company’s strategy. He confirmed that he had personally signed the Kyle and Jackie O contracts, explaining, “they were our biggest talent, bringing in the highest revenue and there was a competitive offer at the time.”

The Remuneration Report was rejected by shareholders, an indication of dissatisfaction with the current share price. Commenting on the Remuneration Report, David Kingston said, “it’s tone deaf to the shareholders to put this motion forward.”

More than 90 per cent of ARN shareholders voted against it which means an amended remuneration report taking investor concerns into account will need to be delivered. Should 25 per cent or more vote against the second report, there would then be a further vote to decide whether to spill the ARN board.

Of the current court proceedings involving Kyle Sandilands and Jackie Henderson, McLennan said “I would like to assure shareholders that the Board is committed to defending these claims and actively pursuing the cross-claims.”

“As these matters are now before the courts, we do not intend to comment further.”

Detailing ARN’s FY25 result, CEO Michael Stephenson said revenue was $285 million for the year … down 10% on the prior period, impacted by a softer advertising market and the impact of changing community and advertiser expectations.

The Kyle & Jackie O saga again came to the fore when Stephenson said there were clients which had chosen not to advertise with ARN because of issues relating to brand safety.

“Over time, we expect a significant percentage of the $26m of revenue that was lost last year because of brand safety concerns to return, improving both our metro radio revenue and revenue share.”

Operating costs were reduced by 4%, to $187 million with $24 million of costs being removed during the year.

Underlying EBITDA was $47.5 million … free cash flow increased by 6% to $40 million.

“This cash discipline enabled us to reduce net debt to $64 million and successfully refinance our debt facilities in December, extending debt maturity by 3 years to FY28.”

“Our disciplined approach to cost and capital management has now delivered $31 million of cost savings.”

“We have increased our cost savings target to $55 million over the FY24 to FY27 period.”

“Radio remains the foundation of this business, but what we are building around it is something bigger, a platform that brings together audio, video, social, and in real life experiences to create one connected entertainment eco system.”

The company maintains it has a clear strategy to deliver sustainable digital growth – by creating great content, distributing it across every platform, and amplifying it on social media.

On its divestment of non-core assets – its says the majority of its SCA shares have now been sold.