Southern Cross Broadcasting has announced its results at today’s Annual General Meeting and is “cautiously optimistic about its prospects” for this financial year despite a slowdown of television advertising.
Southern Cross’ radio division has had a good year, with better returns from 2UE and benefits for the company’s AM stations as a result of fragmentation in the FM band.
Addressing the AGM today, Managing Director Tony Bell reflected on the achievements of the company’s radio division in the past year saying:
Our Talk Radio Network is the only national commercial Talk network [in the country].
o 2UE is one of Sydney’s leading radio stations. The station is an opinion-leader in Sydney, and has established a solid, stable ratings position in the affluent 40 plus age group. Over the past 2 years the listeners for News/Talk radio in Sydney have grown by 270,000 people. We are yet to be satisfied with the station’s financial performance and are currently implementing operational and meaningful programming changes to further lift ratings and revenue.
o 3AW, which is still comprehensively winning the ratings battle in Melbourne, has consistently led the market over the past ten years. Its sister station, Magic 693 has also contributed well to earnings
o In Brisbane we have 4BC and its sister music station, 4BH. The ratings and combined audiences are packaged for advertisers which has led to higher revenue levels and resulted in a healthy profit contribution to the group
o In Perth, 6PR completes our Talk Radio Network. We have adjusted the programming mix at 6PR over the last year and have seen a meaningful improvement in revenue and ratings. Our Perth FM music station, 96FM, currently rates Number One in 25-39 demographic and has generated strong profit growth over the past year.
Over the last three years Australia’s five biggest radio markets have met new competition with the introduction of additional commercial FM stations.
To date, these new licences have resulted in fragmentation of the FM market, with little impact on the AM. In an advertising market where ranking is critical, the fragmentation of the FM services has been positive for Southern Cross Broadcasting’s AM stations.
Bell sees positives in the introduction of digital radio and the moratorium on further expansion of the analog spectrum because there will be no new radio licences for some time with the government’s framework for the introduction of digital radio putting a moratorium on the issue of new commercial radio licences for now.
“The introduction of digital radio should enhance the valuation of our AM stations. Digital radio will improve the sound quality provided by our AM stations, such that there will effectively be no difference between AM and FM,” says Bell.
Sales Revenue reached another record of $535 million, an increase of 33% over last year. Operating profit, after tax and before specific items and interest on convertible preference shares, increased by 25% to $58 million.
The fully franked final dividend of 33 cents per share was paid in October, making a full year dividend total of 66 cents per share.
Southern Cross Broadcasting has a good record of corporate citizenship, recognizing that its broadcasting licenses and frequencies are a public resource:
“Accordingly we willingly provide over 600 non-profit community organisations with free advertising time through our television and radio stations worth over 30 millions of dollars. Our most outstanding single community achievement is the Channel 9 Adelaide Telethon which raised over $1.3 million for 16 charities.
“In addition, our media businesses are actively involved in their respective communities through sponsorships and our employees often participate and give generously of their time in those community activities.”
Commenting on possible changes to media laws, Chairman John Dahlsen says the company could either be a target or could grow:
“The Government has foreshadowed a legislative change to relax restrictions on foreign and cross-media ownership rules. With our diversified portfolio of profitable and efficient media assets, we are both a potential acquirer and a potential target.
“We are in a strong financial position and with proven experience, skills and judgement with acquisitions, we have created considerable shareholder value, particularly as a result of our post acquisition restructuring.”