Southern Cross swings to loss on TV impairment charges

Southern Cross Austereo has swung to an annual loss, hurt by a slow advertising market and TV asset writedowns.

Southern Cross Austereo has swung to a net annual loss of $91.3 million, hit by impairment charges against its television assets, a value loss on assets for sale, and a slow advertising market.

However, the media company, which owns audio and television assets including the Hit and Triple M radio networks, lifted its revenue 0.5 per cent for the 2019 financial year, to $660.1m.

An impairment loss of $226.9m against television licences and value loss on the transmission assets sold for $9.2m to Broadcast Australia were the main reasons for the profit fall.

Underlying profit was up 3.1 per cent to $76.2m for the year and net debt was reduced by 3.7 per cent to $292.6m.

Revenue growth was driven by the audio sector, which includes metropolitan and regional radio and podcasting platform PodcastOne, was up 2.4 per cent to $452.4m.

Metro radio revenue growth grew by 4.2 per cent despite Southern Cross making the decision last week to axe the breakfast show of struggling Sydney station 2DayFM, after years of declining ratings.

Revenue from regional radio grew by 1.5 per cent, which Southern Cross attributed to an industry marketing campaign launched earlier this year known as Boomtown. Regional broadcasters united for the campaign, which aimed to build awareness of the value of regional communities and audiences.

Southern Cross’ podcasting division, PodcastOne, saw audiences and revenues climb by 260 per cent on the previous period, however it did not break down the figures further. It expects to be cashflow break-even during the second half of this financial year.

Television was impacted by a slow advertising market, down 3.2 per cent to $206.6m. At half year results, Southern Cross said part of the revenue decline was due to Nine buying the rights to broadcast the tennis, which commenced in January. As Southern Cross is a regional affiliate, it is affected by programming decisions.

Southern Cross said the advertising market remained challenged in July and August, with the business expecting mid-single digit decline in ad spend. It expects a return to growth in October.

Chief executive Grant Blackley said audio growth was due to the decision to package FM and digital radio reach for advertisers into a single proposition.

“When brands choose to advertise on Hit and Triple M, their advertisements are broadcast in the same day-part on five radio stations in the same location, significantly extending their commercial impact,” Mr Blackley said.

Mr Blackley said the focus this year was investing in “front-of house’ activities, including developing new audio products.

A fully-franked dividend of 4 cents a share will be paid on October 8.