By Colin Kruger
Investors have demanded that Triple M’s owner, Southern Cross Media, slash costs even further after handing down a strike against the company’s executive pay packet and a strong protest vote against the election of its new chairman.
The votes, delivered at the company’s annual meeting on Monday, highlighted the souring sentiment of investors against the performance of the radio and TV broadcaster’s previous management.
“The performance of Southern Cross over the past five years has been extremely poor with massive shareholder value destruction,” David Kingston from K Capital told the meeting.
Southern Cross’s digital platform LiSTNR, with stars such as Hamish & Andy, has been one of the few bright spots amid a cyclical downturn across the entire media sector.
The activist investor said billions of dollars of investor funds have been “torched” and left a company worth just $125 million.
Kingston said the company needed much more than the planned $40 million worth of cost-cutting to get it back on track, suggesting Southern Cross needed a clean-up akin to the 30 per cent cuts being targeted for the US public service by US President-elect Donald Trump and Elon Musk.
“Can you do a Donald Trump/Elon Musk and reduce costs by 20 to 30 per cent? … I think a small reduction in costs is not going to move the dial. I think you need to pull out the red pen,” he said.
With 28 per cent of shares voted against the chairman’s re-election and the remuneration report, new chairman Heith Mackay-Cruise said the company accepted it needed to do better.
“We accept that there actually is (the need for cost-cutting), but it’s also about monetising in a revenue sense, the opportunities we have both with our regional brands, our metro brands, and with LiSTNR,” he said.
Meanwhile, close to 39 per cent of votes went against the performance rights being awarded to new chief executive John Kelly, who took over from Grant Blackley last year. Southern Cross investors that may have voted against these proposals include two former suitors: rival radio group ARN, which owns Kyle and Jackie O’s Star network, and rich-listers Antony Catalano and Alex Waislitz.
Mackay-Cruise commented on the failed offers from ARN and Catalano/Waislitz, and its current talks to sell its regional TV assets, as indicative of a regulatory environment that constrains innovation, efficiency and the sustainability of the Australian broadcast media business.
“Our largest competitors for audiences and advertising dollars are global giant digital platforms – such as Meta, Google and Spotify – but Australia’s pre-internet regulation severely restricts our ability to compete with them on a level playing field,” he told investors.
He added that, while Southern Cross celebrates its connection to local communities around Australia, without regulatory change to allow consolidation “that connection will in time become economically unsustainable”.
Southern Cross Media Group chief executive John Kelly.
Southern Cross offered investors a performance update that reported total audio revenue was up 4.8 per cent in the September quarter, driven by 48 per cent growth from digital revenue on the back of its LiSTNR digital app.
LiSTNR, which has cost the company about $55 million to date, will break even in cashflow this financial year, chief executive Kelly said.
He also pointed out the entire media sector was at the low point of an economic cycle that had been prolonged by high interest rates.
“I think you speak to anyone in the media sector, it is still a cyclical game at the end of the day. And yes, the cycle has been very difficult for three to four years. But we do believe, with the inevitable return to some normality [in terms of] the interest rate cycle, it will see a return to more normal conditions,” he said.
Southern Cross shares closed the session 2.7 per cent weaker at 53¢.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.