Shares in Southern Cross Austereo have plummeted after the company posted a 21 per cent fall in first-half profit, as the media group signalled more changes were needed at its struggling 2Day FM breakfast show.
The company, which also operates the Triple M radio network and has a regional television affiliation with the Nine network, booked a $38.2 million profit in the six months to December 31.
Revenue fell by 5.3 per cent to $333.3 million, dragged down by the loss of revenue from the sale of its northern NSW TV business and declines in metro radio revenues, which contracted three per cent to $121.4.
The results announcement sent Southern Cross shares falling, down 11.5 cents, or 9.7 per cent, to $1.07 on Friday.
Chief executive Grant Blackley said although the company had made “some steps forward” in adjusting its embattled 2DayFM breakfast show, the program was yet to deliver the target revenue of between $20 to $25 million.
“We have seen some modest results but unfortunately they didn’t yield the outcome that we wanted so we will continue to dedicate time and resources to fundamentally improve that offering,” Mr Blackley told investors on Friday.
“2DayFM is certainly our core focus.”
Mr Blackley said the radio station had struggled with acquiring talent for its breakfast program, with a lot of presenters already contracted to other shows.
“It is not the widest pool to choose from but we believe the current investment into Sydney breakfast and the slight adjustment we have made … is positive,” he said.
The chief executive said the company was positioning the current breakfast show to an “older” audience to avoid competition with its peer networks that are “arguably focusing on that younger end”.
“We are trying to find that clean air to allow us to be one of those principal channels that you will tune into in the morning,” he said.
Southern Cross said regional television and radio revenues had offset some of the losses in metro revenues, having increased 4.6 per cent in the six months, when excluding the impact of the company’s sale of its Northern NSW TV business.
The company sold its northern NSW TV business to Bruce Gordon’s WIN television network in May for $55 million and the absence of contribution from the business weighed on first-half profit.
Costs fell 20 per cent from a year ago to $7.7 million and the company expects expenses to reduce further following its recent refinancing.
Mr Blackley said the company has worked hard in the past two years to improve its balance sheet.
“With the systematic divestment of non-core assets, including the northern NSW TV licence and 45 transmission towers, the company has successfully reduced debt and leverage to improve the company’s financial health,” Mr Blackley said.
SOUTHERN CROSS PROFIT FALLS
* Net profit down 21.2pct to $38.2m
* Revenue down 5.3pct to $333.3m
* Fully franked interim dividend of 3.75 cents, unchanged