Annual Report 2018
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SOUTHERN CROSS AUSTEREO - ANNUAL REPORT 2018 AM, FM & Digital Radio Stations 86 7.6 Million National Reach 3.8 Million listeners 5 Million listeners nationally each week 1 Podcast nationally each week 40 AM, FM & Digital Network 46 FM & Digital Stations Stations 17 #1 Online #1 Radio Group 17 Local Television Radio Group on Social News Services 5.3 million weekly $1 Billion 2,500+ TV viewers Capitalisation Staff Southern Cross Austereo . Annual Report 3 Contents Winning Aspiration 6-7 SCA Engages with Australia 8-9 Chairman’s Statement 10-11 CEO’s Report 12-13 24. The Leaders In Audio The Hit Network 14-15 The Triple M Network 16-17 PodcastOne 18-19 Entertaining The Future 20-21 Television 22-23 Connecting Clients & Consumers 24-25 Culture, Leadership & Diversity 26-27 Making A Difference 28-29 The Board & Leadership Team 30-33 14. Financial Report 34-104 ASX Information 105 Corporate Directory 106 18. 4 Southern Cross Austereo . Annual Report 20. 13. 8. 10. 16. Southern Cross Austereo . Annual Report 5 Winning Aspiration Southern Cross Austereo is one of Australia’s largest and most diverse media entertainment businesses, with audio and visual content covering 95% of the country. With prominent brands, exceptional content, an expansive social media presence, integrated digital assets and exciting “This aspiration drives all of its live events, SCA inspires Australian people, from high profile national communities to and local celebrities through engage with them every day. to SCA’s dedicated employees Through advanced located throughout more than metrics, insight- driven strategy 60 offices around Australia.” and an emphasis on innovation, SCA has a Winning Aspiration to be SCA delivers exceptional outcomes the preferred entertainment company for clients - connecting them in its markets. This aspiration drives with audiences in a unique all of its people, from high profile and powerful way. national and local celebrities through to SCA’s dedicated employees located throughout more than 60 offices around Australia. 6 Southern Cross Austereo . Annual Report Southern Cross Austereo . Annual Report 7 SCA Engages with Australia: Southern Cross Austereo engages with more than 7.6 million consumers across Australia each week through its expansive audio assets and 5.3 million through its television assets. Under the Triple M and Hit networks, While each SCA station is unique, ventures, SCA also broadcasts Nine SCA hosts 86 radio stations. In early serving the needs and interests of Network programming in Tasmania 2018, the company rebranded Sea FM its local market, all have access to and Ten programming in Darwin and Bundaberg to Triple M - bringing the the same exciting Hit and Triple Remote Central and Eastern Australia. tally to 46 stations under the Hit brand M competitions and experiences - In partnership with the Federal and 40 under the Triple M brand. promoting a sense of community Government, a joint venture between This includes the Hit and Triple M around the networks and enhancing SCA and Imparja Television operates networks’ portfolios of four digital radio brand sentiment. the Viewer Access Satellite Television brands each. Digital radio is available Measurement of regional radio (VAST) service - making free-to-air in the five mainland metropolitan audiences continues to improve with television available to people living and capital cities at present and will be SCA participating in 16 regional travelling in remote Australia and in extended to Hobart, Canberra and market surveys in 2018. These surveys black-spot areas. Darwin during 2019. show that regional radio audiences SCA broadcasts 15 local television On top of this SCA broadcasts 92 free- continue to be robust, with SCA’s news services across regional Victoria, to-air TV signals in regional Australia, stations often ranking first or second southern New South Wales and predominantly under the Nine (and sometimes both) in a high regional Queensland. These services Network brand. proportion of its regional markets. are produced by news journalists and SCA has the largest and most diverse production staff talent line-up, with local talent in each employed by Nine market, and national shows featuring “SCA has the largest and most and hosted by SCA some of Australia’s biggest names. diverse talent line-up, with in each local market. Each station places significant local talent in each market, and Following a rebrand emphasis on everything local, ensuring from Southern Cross communities have access to the national shows featuring some of Television to Seven information that matters most. SCA’s Australia’s biggest names.” Local in July 2018, local breakfast radio teams provide SCA continues to listeners with the latest from their produce local news Under the Nine Network brand, SCA regions including more than 21,500 bulletins for its Tasmanian and Broken broadcasts television in regional hours each year of local news, sport Hill/ Spencer Gulf broadcast areas and Queensland, regional Victoria, regional and weather via 72 separate local local news updates in the Darwin and southern New South Wales, Broken news services. Central broadcast areas. Each day, Hill and Spencer Gulf. SCA broadcasts a committed team of journalists source In 2018, SCA moved to a new national Seven programming in Tasmania, stories that matter to the communities corporate structure aimed at unifying Darwin, Remote Central and Eastern in these regions. its metropolitan and regional brands Australia, Broken Hill and Spencer and optimising performance and Gulf; and Ten programming in Broken growth into the future. Hill and Spencer Gulf. Through joint 8 Southern Cross Austereo . Annual Report Southern Cross Austereo . Annual Report 9 Chairman’s Statement On behalf of the Board of Directors, I am pleased to present Southern Cross Austereo’s Annual Report for the 2018 financial year. The Company’s revenue of $653.0 These results were below our internal million was 5.0% down on the prior targets. The factors that influenced year and EBITDA of $154.7 million this performance included a greater was 12.8% down on the prior year. than forecast decline of 3.4% in the Net profit after tax of $1.4 million three aggregated regional television was down 98.7% on the prior year. advertising markets and the weaker In addition to the impairment charge than expected performance of our described below, these comparisons metro radio business in the first three were affected by the Company’s quarters of the year. These factors were disposal during 2017 of its former mitigated to some extent by the strong northern NSW TV operations, a performance of our national sales deferred tax credit of $14.8 million teams in regional markets. Supported recognised in 2017 and reinstatement by ratings growth for Nine Network in 2018 of spectrum licensing fees. programming, our national television Reflecting the Company’s strong cash revenue share in the three aggregated generation, the Board maintained markets grew from 33.8% to 36.9%, dividends of 7.75 cents per share, in while our national regional radio line with the prior year. revenue grew by a healthy 15.3%. The growth in national sales was driven by targeted initiatives “Supported by ratings growth for taken to educate national advertisers Nine Network programming, our about the economic Changes made to our metro radio and value-based national television revenue share shows at the start of 2018, including advantages of the launch of two new national Drive in the three aggregated markets investing in regional shows in Kennedy Molloy and Hughesy communities. grew from 33.8% to 36.9%, & Kate, as well as a broadening of while our national regional radio Metro radio declined our Breakfast line-up on 2DayFM in the first half of have contributed to an improved revenue grew by a healthy 15.3%” the financial year performance in the survey results due predominantly recorded in 2018 for both the Hit and The Company recognised an to the underperformance of 2DayFM in Triple M networks. Coupled with the impairment charge of $104.7 million Sydney. We took several initiatives in increased audience delivered by our against the Company’s regional the second half of the year to address digital radio stations, this has enabled business unit, driven by independent this underperformance. We were also the Company to deliver a much forecasts of an ongoing decline in disappointed that Vevo made a global improved metro radio performance in regional television markets. These decision in February not to renew the second half, notably in the fourth forecasts support the Company’s contracts with international partners, quarter following the release of survey decision to reduce its exposure to including the Company. 1 in March 2018. This is providing television by sale during 2017 of its positive momentum into the new former NNSW television business. financial year. 10 Southern Cross Austereo . Annual Report With the Board’s support, management strategies to secure key talent, both his senior leadership team, for their has started a project to review the for the management roles of the future efforts during the year. I also thank my Company’s strategic workforce and the next generation of talent for fellow directors for their counsel and requirements. A significant change flagship radio shows and podcasts. contribution during the year. I look to integrate the metro and regional forward to working with the Board and After significant changes since 2015, business units and re-align the management team in the year ahead the Board was stable throughout the Company along national functional to achieve our aspiration to be the year just ended. Leon Pasternak and I lines was announced in June. This preferred entertainment company in will be submitting for re-election at the project will allow the business to our markets. AGM later this year.