Media market trends ensure a SCA TV deal - sooner or later

Declining regional ad shares and BVOD growth make a Southern Cross Austereo TV asset sale a strategic necessity.

David Kennedy · Venture Insights4 October 2024Period: FY243 min read

20%↓

Regional TV share of total FTA ad revenue

29%↓

SCA regional TV EBITDA decline (FY24)

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Abstract

This report analyses the structural pressures driving an inevitable sale of Southern Cross Austereo’s (SCA) regional TV assets to metropolitan affiliates Seven and Ten. Regional TV’s share of total free-to-air ad revenue has contracted from 24% to 20% over the last decade, exacerbated by the shift of Nine’s affiliation to WIN in 2021. With SCA’s TV EBITDA falling 29% to $13.3 million in FY24, the valuation gap between buyers and sellers is narrowing, facilitating a long-anticipated market consolidation.

Key Takeaways

Regional TV advertising revenue share has contracted from 24% to 20% over the last decade due to BVOD growth.
SCA's regional TV earnings are in steep decline, with FY24 EBITDA falling 29% to $13.3 million.
The 2021 loss of the Nine affiliation forced SCA into a lower-revenue deal with the Ten network.

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Frequently Asked Questions

SCA’s regional TV earnings are in a state of rapid contraction, with FY24 EBITDA falling 29% to just $13.3 million. This financial decline, coupled with a decade-long drop in regional TV’s share of total free-to-air ad revenue from 24% to 20%, has made the current operating model unsustainable.

Metropolitan networks require direct control over regional broadcast infrastructure to support national BVOD growth across the 30% of Australian households located outside major cities. Owning these assets allows networks to bypass the inefficiencies of the current affiliation model, which saw SCA forced into a lower-revenue deal with Ten in 2021.

The primary barrier to consolidation was removed with the 2017 abolition of the 75% TV reach limit. This regulatory shift has already enabled Seven’s 2021 acquisition of Prime and now facilitates the final consolidation of SCA’s assets into the remaining metropolitan networks.

SCA intends to exit the television market entirely to become a pure-play audio company. The strategy focuses on scaling the LiSTNR digital network to offset the earnings volatility that saw regional TV EBITDA drop to $13.3 million in the last fiscal year.

Abstract

Key Takeaways

Frequently Asked Questions

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