SCA says its metro radio business is “trading flat”

Southern Cross Austereo has issued a profit downgrade for the current fiscal year, advising the market that its EBITDA is expected to fall below last year’s result of $168 million.

The largest radio group in Australia had already informed shareholders that earnings would be at the lower end of the previously projected $177 million to $183 million.

In a statement issued to the ASX on Friday, SCA said that while it continues to perform well in each asset class, advertising markets remain a challenge.

The network advised that between January and April 2017, the metro markets have declined 2.2%, but that regional radio continued to grow. However, its regional TV business has also suffered in recent months.

It’s worth noting that the updated figures don’t reflect the $55 million deal with WIN Television Network who will acquire SCA’s Northern NSW television assets.

Last year’s result of $168 million for SCA compares to ARN’s result of around $86 million and NOVA Entertainment’s result of about $62 million for the same period. Both ARN and NE operate a considerably smaller number of stations compared to SCA.

Further breaking down the 2016 figures, SCA’s metro radio assets delivered EBITDA of $51.4 million, lower than both ARN and NE, and SCA’s regional radio assets produced EBITDA of around $131 million.

ARN’s last reported operating margin was about 38% and NE’s about 33%. Benchmark that to SCA’s 33% margin for regional and about 22% for its metro radio business.

Clearly, it’s the capital city markets that remain a pressure point for SCA.