ARN Media was ‘not a good investment for us’, says Allan Gray

The media company has had a change to one of its biggest shareholders after an investment firm withdrew following concerns with the company’s financial progress.

Kyle Sandilands and Jackie O have received numerous awards for their radio show. Source: Facebook.

A major investor in ARN Media – the owner of FM stations including KIIS and Gold – said the company had failed to deliver decent investment returns, prompting the sale of its entire shareholdings last week.

Allan Gray’s chief investment officer Simon Mawhinney told The Australian on Sunday that it was the right time for the firm to offload its entire stake.

“We had been on the record for a long time saying we wanted to exit ARN,” he said.

“We’ve been a shareholder in ARN Media for some time and things haven’t transpired the way we had hoped for, it hasn’t been a particularly good investment for us.

“While we see the value in the company we think the path to crystallising that value is unclear from the perspective and shareholders and we felt this was a good time to pass the baton on to other shareholders.”

Sources confirmed to The Australian that Allan Gray’s sale allowed Samuel Terry Asset Management to up its stake from 7.4 per cent to 16 per cent, overtaking other major shareholders including Seven West chairman Kerry Stokes who owns a 14.5 per cent share in the media company and News Corp (publisher of The Australian) which own a 13 per cent stake.

Allan Gray held about a 10 per cent stake in ARN Media before offloading its entire investment and on Sunday an ARN Media spokeswoman declined to comment about the transactions.

The latest move also comes after the media company, headed up by chief executive and managing director Ciaran Davis, failed in its attempt to take over rival media company Southern Cross Austereo.

In October 2023 ARN Media joined forces with Anchorage Capital Partners and made a non-binding indicative proposal to acquire SCA, but Anchorage later withdrew their involvement in the consortium.

Kyle Sandilands and Jackie O have dominated the Sydney breakfast radio market.

ARN’s annual report, released last month, said: “Despite the proposal not proceeding, ARN Media believed that amid increasing pressures from global technology and media platforms and a government regulatory environment that has not kept pace, the industry needs market restructure and consolidation.”

The report also showed the company’s revenue from ordinary activities was $168.1m, up 1.3 per cent, while underlying EBITDA was stable at $35.5m.

ARN Media recently launched the top-rating Sydney KIIS FM breakfast show hosted by Kyle Sandilands and Jackie “O” Henderson into Melbourne, but the program has yet to lure a strong following in the Victorian capital.

In the latest official GfK ratings the program drew an audience share in Melbourne of 6.1 per cent and was seventh in its timeslot.

ARN’s annual report said despite “ongoing challenging market conditions” including a tough advertising market, the company conceded it would take time for the Sydney-based show to build a strong Victorian audience.

“Like all new shows, it will take time to build a loyal audience and while it is early days, we are very confident in the strategy and ability of our team to make this move a success,” the report said.

“Brand tracking results demonstrate a steady increase in conversion from awareness through to trial which we expect will translate to cumulative audiences in the coming months.”

Official ratings show that in survey five of 2024 – which was released in August – the Kyle and Jackie O Show had 491,000 listeners compared to survey five 2023 when the breakfast program it replaced, hosted by Lauren Phillips and Jase Hawkins, had 558,000 listeners.

Phillips and Hawkins were dumped by KIIS FM in November 2023 to make way for the Kyle and Jackie O Show, but the pair were later signed on by Nova FM.

In the latest survey results Phillips and Hawkins recorded an audience share of 9.9 per cent.

ARN Media shares fell 1.79 per cent to 55c on Friday.

Originally published as ARN Media was ‘not a good investment for us’, says Allan Gray