Southern Cross boss to exit after tumultuous tenure

Radio and television company Southern Cross Austereo’s chief executive, Grant Blackley, will step down before the end of the financial year, completing an eight-year tenure that coincided with industry consolidation, a global pandemic and a share price fall of nearly 80 per cent.

The ASX-listed media company, which owns the Triple M and Hit radio networks, has announced that chief operating officer John Kelly will succeed Blackley, more than a year after it hired an external recruitment firm to scope the market for a new leader.

SCA chairman Rob Murray said Blackley had made a significant contribution to the company by investing heavily in digital audio platform LISTNR as well as nationalising the Hit and Triple M radio networks.

Grant Blackley has run Southern Cross since 2015.Credit: Louise Kennerley

“The board has appreciated Grant’s leadership over his term and particularly through the challenges presented by the lockdowns and uneven recovery from the COVID-19 pandemic” Murray said. “It is also a credit to Grant that he embraced and led constructive cultural change, along with a robust succession planning process throughout his tenure.”

Blackley is one of the media industry’s longest serving CEOs. He was chief executive of Channel 10 for six years before he was fired in 2011. He became chief executive of SCA in mid-2015, replacing Rhys Holleran, who was blamed for the network’s poor performance after it lost popular radio hosts Kyle Sandilands and Jackie “O” Henderson.

His departure from SCA was speculated in the industry for more than a year, partly because of the board’s succession planning efforts but also due to concerns about the company’s long-term growth prospects.

In February, Morningstar analyst Brian Han wrote a scathing analysis of SCA’s half-year financial results, taking aim at its regional television business and the continued promises by management that the large sums it had invested in digital would ultimately pay off.

“It is up to management to show the group can deliver operating leverage, and project a clear trajectory to a higher earnings base,” Han said.

The company’s revenue fell from $611 million to $519 million between 2015 and 2022, while the share price – which was about $6.70 when Blackley joined – was trading at 82¢ on Monday afternoon.

SCA is one of the last remaining ASX-listed media companies and faces ongoing challenges due to weaker advertising conditions and a change in the way people listen to music. It remains a lone wolf in a market that has experienced widespread consolidation.

The $4 billion merger of Nine Entertainment Co, owner of this masthead, and Fairfax Media, the merger of Seven West Media and Prime Media Group and Here, There and Everywhere’s (HT&E’s) more recent acquisition of regional radio network Grant Broadcasters have only made it more difficult for SCA to compete for advertising dollars.

A failure to sell its regional television business or merge with Seven West Media has raised further concerns about the company’s long-term growth. It also suffered a financial hit when it switched television affiliate deals from Nine to Network Ten in 2021.

SCA shares fell nearly 80 per cent from when Blackley took the helm to when a capital raising was completed in May 2020. The company raised $169 million as it faced a significant hit to revenue caused by factors related to the pandemic. Shares in the $199 million company have fallen by 60 per cent since November 2020, when the company completed the one-for-10 share consolidation.

Its main growth focus is its digital audio offering, which is underpinned by audio streaming and podcast app LISTNR. But this is only a small part of the entire company: digital audio revenue – which includes LISTNR – made up just $10.5 million of the company’s $258.8 million revenue in the first half of fiscal 2022.

The shift to digital will be part of Kelly’s remit when he takes the helm in July. Kelly has worked in Australian media and sport for more than 25 years, including eight as group chief financial officer at Channel Ten. SCA chairman Murray said Kelly intimately understood the SCA business.

“John is universally respected around the business for his balanced and engaging leadership style, his ability to build effective and accountable teams, and for his strong networks in the wider media industry,” he said.

Blackley thanked the team for their support during his tenure and said he was thrilled to hand over to his “natural successor”, Kelly.

“Having worked with John for over 20 years, both at SCA and previously at the Ten Network, I know he is the right person to lead the next growth phase at SCA,” Blackley said.

Blackley has agreed to extend his contractual post-employment restraint period from six months to nine months.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.