SCA’s Transformation Risks: Can Cost Cuts and Digital Growth Last?
Southern Cross Media Group (SCA) reports a robust FY25 with digital audio growth driving a 34.4% EBITDA increase and a 37% reduction in net debt, while resuming dividends.
- 5% revenue growth to $421.9 million
- Digital audio revenue up 29%, LiSTNR now EBITDA positive
- Net debt reduced by 37% to $67.6 million
- EBITDA rises 34.4% to $71.1 million
- Resumption of fully franked dividends at 4 cents per share
Transformation in Full Swing
Southern Cross Media Group (SCA) has delivered a compelling FY25 performance, underscoring its successful transformation from a traditional media company into a digitally focused, technology-driven audio powerhouse. The company’s strategic pivot centers on its flagship digital audio platform, LiSTNR, alongside a revitalized broadcast radio business.
CEO John Kelly highlighted that SCA is now firmly positioned as a leader in Australian audio, with a fully refurbished broadcast operation complemented by a best-in-class digital offering. This transformation is reflected in the company’s financials, with revenue climbing 5% to $421.9 million and EBITDA surging 34.4% to $71.1 million.
Digital Audio, The Growth Engine
Driving much of this growth is SCA’s digital audio segment, which posted a 29% increase in revenue to $45.1 million and achieved positive EBITDA of $2.0 million for the first time. LiSTNR’s audience has grown steadily to 2.4 million signed-up users, while its ad-tech capabilities have captured over 45% market share in podcast sales. The platform’s integration into 70% of revenue briefs underscores its commercial traction.
This digital momentum is complemented by strong broadcast radio results. Metro radio revenues increased by $7 million, supported by a rise in audience share to 28.3%, with Triple M stations dominating the coveted 25-54 demographic. Regional radio also showed resilience, growing national government sector revenues despite local retail softness.
Disciplined Cost and Capital Management
SCA’s disciplined approach to costs and capital expenditure has been pivotal. Non-revenue related costs declined by 2.5%, while capital expenditure was reduced to $6.8 million, reflecting a shift towards revenue-generating digital investments. Headcount reductions and outsourcing have further streamlined operations.
These efforts have translated into a 37% reduction in net debt to $67.6 million and a leverage ratio of 1.10 times, well below covenant thresholds. The company refinanced its $160 million syndicated debt facility, securing operational headroom with $57 million undrawn.
Return to Shareholders
After a hiatus, SCA has resumed dividends, declaring a fully franked final dividend of 4 cents per share, representing a 64% payout ratio of underlying earnings per share of 6.3 cents. The company signals a commitment to maintaining dividends within a 65-85% payout range while keeping leverage below current levels.
Looking Ahead
Guidance for FY26 anticipates continued revenue growth to $435-440 million and EBITDA expansion to $78-83 million, driven by sustained digital audio growth and stable broadcast revenues. Cost discipline remains a priority, with non-revenue related costs targeted below $270 million and capital expenditure forecast around $10 million.
With the TV segment fully divested, SCA’s streamlined focus on audio positions it well to capitalize on evolving media consumption trends, particularly the rise of streaming and podcasting.
Bottom Line?
SCA’s FY25 results mark a decisive step in its digital audio transformation, setting the stage for sustained growth and shareholder returns.
Questions in the middle?
- How will SCA sustain digital audio growth amid increasing competition?
- What impact will ongoing cost discipline have on content investment and innovation?
- How might market conditions affect SCA’s ability to maintain leverage below 1.0x?
