Radio a strong base, digital audio will bring growth: SCA’s John Kelly

Southern Cross Austereo (SCA) has announced strong full-year results for FY25, marking the end of a transformative period with the divestment of its regional TV assets and a sharpened focus on becoming a best-in-class audio company.

CEO John Kelly says the strategic shift allows the company to concentrate on its leading radio and digital audio assets, including LiSTNR, HIT, and Triple M, targeting the lucrative 25-54 demographic that drives the majority of its advertising revenue.

Kelly is optimistic about the company’s sustained improvement, saying the team is “re-energised by the delivery of our sustained improvement in our operating and financial performance,” and highlighted the importance of certainty in operating costs paired with momentum in revenue growth. He sees significant opportunities for operational leverage from expanding cash flow, which will enable the company to reduce debt and increase dividends for shareholders in the coming years.

SCA’s digital audio business, particularly its LiSTNR platform, has shown remarkable growth and has now become EBITDA positive. The company noted that digital audio is increasingly viewed as an essential part of marketers’ buying suites, with Kelly pointing out that SCA aims to compete with international digital platforms like Meta and Spotify by growing both metro radio and digital audiences simultaneously.

At the close of trading today the company’s share price had jumped 10 cents on the results and news that dividend payments have been reinstated with a 4 cents per share fully franked payout to investors.

Revenue and profitability have grown, debt is down, ratings are up. SCA’s profit margin is sitting at about 17% and John Kelly would like to get it up to 20% over time.

After two years in the CEO role, Kelly talked about the team’s achievements:

“We’ve had significant improvement in our shares both from an audience and revenue perspective. Our teams have worked very hard across regional Australia to improve our outcomes throughout the Hit and Triple M network.”

Digital revenue growth is one of the highlights of this year’s results, with the success of LiSTNR now an increasingly important part of the business, with signups growing at a rate of 20%.

“LiSTNR has been going for only four years, as you know Steve. I think if you look across the world in relation to people launching digital audio properties, platforms and ecosystems, there’s not too many of them that have been going for four years that have got to the scale of LiSTNR, with 2.4 million signups, profitable and growing.”

The combination of original podcasts, the LiSTNR platform and more sophisticated methods of delivering advertising to both mass and niche audiences is part of SCA’s strategy to keep Australian advertising revenue in Australia.

“For every dollar written across the CRA ecosystem, we are about 50 % of it. I think it’s a remarkable performance by our team, not only in terms of audiences but most crucially in relation to Ad Tech. We have a best-in-class property in LiSTNR, which is clearly a competitor, not to the broadcast properties of ourselves or our competitors, but competitive to the likes of Meta, Spotify, etc. Clearly we’ve achieved excellent cost control across that journey as well. Long answer but there’s a lot there.”

Digital revenue grew to $45.1 million, up 28.8% on FY24 figures. The earnings (EBITDA) contribution from the LiSTNR platform increased by $12.9 million, with LiSTNR now EBITDA cashflow positive, delivering $2.0 million in underlying EBITDA for the year. Digital Audio revenue growth is forecast to continue at current double-digit growth rates with share maintained

Broadcast Radio continues to deliver strong audiences, reaching 71% of Australian weekly and streaming radio is on the rise, with more than 30% of Australians listening to radio streams each week. More details of the results here.

Overall revenue was $421.9 million, up 5.0% and underlying earnings (EBITDA) soared to $71.1 million, a 34.4% increase from FY24. Underlying Net Profit after Tax (NPAT) for continuing operations climbed to $15.1 million, up by $10.6 million compared to the previous year. The company paid off $40 million in debt.

SCA, like other commercial media companies, benefitted from election advertising in the second half of the financial year.

• Metro radio revenue was $188.1 million, up from $181.1 million last financial year
• Regional radio revenue was $163.6 million, fractionally up from $163.1 million last financial
• Digital advertising revenue was $42.4 million, well up from $32 million last financial.

The figures show the continuing strength of broadcast radio, as the same time as revealing the future growth trajectory of podcast and targeted instream advertising.

Explaining more about the ability to target digital audio advertising to deliver niche audience segments to advertisers, Kelly sees growth from this area of the audio business continuing to be significant.

“We clearly see that audio as a medium continues to perform very strongly, but I very much see that the grow in audience and revenue will come out of the digital part of that now.

“Whether that’s an ad for Airbnb in Hamish Andy heard across all platforms. Or whether that’s us replacing an ad from a targeted streaming perspective in broadcast radio spot, it’s all part of it that mix.   That’s the great thing about LiSTNR, it’s sovereign, it’s your own property and we can prioritise our own development of it. Our priority for the last 18 months has been about building the best Ad-Tech, we have invested heavily in resources and people and we are getting those results.

“It’s no surprise that we’ve been able to grow both our broadcast share and our digital share at the same time. If there’s a campaign brief for Woolworths and we’re going in there with a broadcast and digital offering, we have a competitive advantage because of the targeting attribution we can gain through our Ad-Tech hub. It’s not only benefiting LiSTNR, it’s also benefitting broadcast. I think that’s perhaps not fully understood by the marketplace.”

SCA, along with the other commercial radio networks and CRA, is actively working on improving audio Ad-Tech and creating easier ways for advertisers to buy targeted audio advertising with Audio ID activities.

“When we invested in LiSTNR a lot of people criticised us and said we would never be profitable. We are, after just four years and it now provides us with a vanguard to compete against the big tech companies. We’ve got to keep supporting Australian media and this strategy is part of that.” 

After a tough year last financial where there was a round of redundancies, SCA has stabilised staffing and is committed to regional markets, according to Kelly.

“We continue to invest in live and local content. I was in Karratha the other day, we’ve still got breakfast in Karratha and Geraldton…  We continue investing in live and local content because localism is going to beat globalism any day of the week, particularly in audio, so if we are making efficiency changes it’s generally back of house, but a lot of that is behind us. I’m pleased to say we have a stable workforce at the moment.”

SCA forecasts continued momentum in FY26, with total revenue expected in the range of $435 million to $440 million. Total audio revenues have grown modestly in the opening months of the financial year, bolstered by metro radio share growth and above-market performance in digital audio. Digital audio revenue growth is set to maintain double-digit rates, with share held steady.