ARN Media Reports 7% Revenue Drop, 21% Digital Audio Growth, and $20m Free Cash Flow
ARN Media reported a 7% revenue decline in the first half of FY25 amid audience challenges and a sluggish post-election market, yet digital audio revenue surged 21%. A $40 million transformational cost-out program and leadership overhaul set the stage for a strategic reset and growth in the second half.
- 7% revenue decline offset by 21% digital audio growth
- $40 million cost-out program with $35 million already implemented
- EBITDA down 14% to $25 million; NPAT fell 56% to $6 million
- Free cash flow up 30% to $20 million; net debt reduced by 12%
- Strategic divestment of non-core Cody Hong Kong asset underway
Navigating a Challenging Market
ARN Media’s first half of fiscal 2025 revealed a complex picture – total revenue declined by 7% to $142 million, pressured by audience challenges and a slower advertising market following the federal election. Despite this, the company’s digital audio segment demonstrated robust health, growing revenue by 21%, a bright spot amid traditional broadcast headwinds.
The company’s CEO, Ciaran Davis, highlighted that the first half was a period of strategic reset, with a full commercial team restructure completed and a transformational $40 million cost-out program underway. Impressively, $35 million of these savings have already been actioned, reflecting a disciplined approach to operational efficiency and future-proofing the business.
Financial Performance and Cash Flow Strength
EBITDA before significant items fell 14% to $25 million, while net profit after tax dropped sharply by 56% to $6 million. However, free cash flow improved by 30% to $20 million, driven by strong cash conversion of 215%, underscoring effective working capital and capital expenditure management. Net debt was reduced by 12% to $78 million, bolstered by a solid liquidity position with $15.5 million in cash and $67 million in unused credit facilities.
ARN Media also declared a fully franked dividend of 1.2 cents per share, signaling confidence in its cash generation capabilities despite the revenue pressures.
Audience and Content Strategy Reset
The company’s flagship Gold network outperformed the market, gaining commercial share, while the KIIS network underperformed, prompting a refreshed content and commercial strategy to regain momentum. Regional markets continued to deliver strong results, outperforming metropolitan areas, reflecting shifting audience dynamics.
Digital audio remains a key growth engine, with live streaming revenue up 93%, 3 million registered users, and the iHeart podcast network reaching over 7 million monthly listeners. ARN’s investment in digital capability, including new leadership hires and data-driven advertising technology, aims to accelerate this momentum.
Strategic Divestment and Outlook
ARN is progressing the sale of its non-core Cody Hong Kong outdoor advertising business, which required no cash funding in the half. This divestment aligns with the company’s focus on core Australian media assets and digital growth.
Looking ahead, ARN forecasts a low to mid-single digit revenue decline in the second half of FY25 but expects commercial share gains supported by audience growth and digital revenue acceleration. The company remains on track to deliver lower operating expenses than FY24, with cost reduction benefits accelerating into FY26.
Bottom Line?
ARN Media’s reset is underway, balancing near-term revenue pressures with digital growth and cost discipline that could reshape its market position.
Questions in the middle?
- How quickly can ARN’s refreshed KIIS network strategy translate into commercial share gains?
- What impact will the Cody Hong Kong divestment have on ARN’s capital allocation and growth investments?
- Will digital audio revenue growth sustain momentum to offset traditional broadcast declines?