The half year results for broadcaster SCA open a window into the prospects for radio and audio advertising in Australia as it emerges from the economic fallout of the pandemic.
The company reported audio revenue up 11.5% to $193.8 million in the six months to December.
Metropolitan radio advertising revenues up by 13.8% to $90.6 million in the six months to December, aided by a strengthening market recovery and an improved commercial revenue share for SCA.
Regional radio revenue was 4.9% higher at $82.4 million, led by stronger local revenues, up 5.6%, and improving national revenues up 4.%.
SCA’s digital audio revenue outpaced the market, up 36.8% to $10.5 million in the half year.
The company says the markets are cycling over strong government spending but impacted by the continuing COVID-related uncertainty including disruptions in supply chains and lower than expected hospitality, travel and event advertising.
CEO Grant Blackley: “The recovery in advertising markets continues to strengthen but is uneven, with Omicron related disruptions tempering the strong momentum from November and December.”
SCA grew underlying EBITDA 16.3% to $46.5 million for the six months to December. The company will pay a fully franked dividend of 4.5 cents a share. Revenue was flat at $259.8 million and net profit after tax down 48% to $16.8 million.
“When the lockdowns ended in late October in Sydney and Melbourne we saw the entire market bounce back really quickly in terms of listenership and revenue.” Blackley told AdNews.
However, a few days before the Christmas break there was an omicron lag effect.
“I think marketers had planned a whole series of campaigns but they didn't approve the same volume of campaigns that they otherwise would have," he says.
“We've delivered a 3% increase in revenue for January, in audio. We know February and March will be slightly better and we'll probably put through Q3 up about mid single digits.
"The radio market is still lagging TV in its recovery cycle. Radio is still has about 15% growth left to get back to a pre COVID level.
“I think that will naturally come as we start to see certain categories like retail, and their supply chain issues being resolved, auto coming back in the market, sport and live entertainment growing, and even a bit in finance and insurance.
“They're all very big contributors to audio. So to that end, there's about $100 million of growth yet to come back to a level of normality, or pre COVID level."
Digital is a priority.
The LiSTNR app is driven by premium content, a leading technology platform, and an engaging marketing proposition.
A slide from a briefing of market analysts:
“The great news is that the digital audio market is expanding, not only here, but overseas," he says.
“In the US they're at an inflection point where they're going to double the revenue, in their opinion, from $1 billion to $2 billion. So the market’s becoming meaningful and therefore a very clear investment model for marketers and agencies.
“And the gravitas of consumption is actually now driving more and more inquiry and larger briefs out of the advertising community.
In our digital audio portfolio, lisnr has accumulated after its first birthday 500,000 known signed in users.
“We have very strong ambitions over the next six months respecting that we only launched the product from scratch last year. We actually didn't have a marketing campaign until Boxing Day most recently.”
Competitors?
“We're installing about, on a weekly basis, about two times as many people to our platform versus HT&E (ARN)," says Blackley.
“They came out saying that they've delivered $10 million in revenue for the full year, where we've come out and confirmed we've done $10.5 million in the half year.
“We will continue to invest in this because it's a high growth proposition, in technology, in content, both domestically and abroad."
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