Good morning, everyone, and welcome to the annual general meeting of Southern Cross Media Group Limited. My name is Heith Mackay-Cruise, Chair of SCA. Well, I joined the board in October 2020. I became Chair in March this year, and today is my first AGM as Chair. I'm joining you today from Sydney and would like to begin by acknowledging the traditional custodians on the land of which we meet today, the Gadigal people of the Eora Nation. I pay my respects to their elders, past and present, and acknowledge their ongoing contribution to land, sea, and community. I extend that respect to all Aboriginal and Torres Strait Islander people joining us here in Sydney or elsewhere as part of our virtual meeting. I've been informed that a quorum is present, and I'm pleased to officially declare the meeting open. Thank you for joining us today.
Today's meeting is being held in our Sydney office and virtually using our online platform provided by Computershare. This platform allows shareholders, proxies, corporate representatives, and guests to attend the meeting remotely by watching our live webcast of the meeting. In addition, shareholders, proxies, and corporate representatives can ask questions and submit votes in real time. To allow sufficient time for those participating online to ask questions or vote, I now declare voting open on all items of business. I will provide an opportunity for those in the room and online to ask questions and vote later in the meeting. Before moving to some housekeeping matters, I would like to ask my fellow directors to introduce themselves to you. Let's start with our Managing Director, John Kelly.
Good morning, everyone. I'm John Kelly, and I'm SCA's CEO and Managing Director. I've been with the company since 2016. I've been CEO since June last year. I look forward to giving you an update later in the presentation in relation to our operating performance and our strategy.
Thanks, John. I'm Carole Campbell. I've been on the board since September 2020, and I was recently re-elected to the board at last year's AGM. I chair the Audit and Risk Committee, and I'm a member of the People and Culture Committee.
My name is Ido Leffler. Like Heith and Carole, I joined the board in 2020 and was most recently elected by shareholders at last year's AGM. I'm a member of the board's Audit and Risk Committee and the board's People and Culture Committee.
Good morning. I'm Marina Go, and I'm delighted to have joined the board on the 1st of October. I'm Chair of the board's People and Culture Committee and a member of the Audit and Risk Committee. I look forward to telling you more about what I bring to SCA when I submit myself for election later. Thank you.
Thank you, everyone. We're also joined today by several members of the company's executive team, including Tim Young, our Chief Financial Officer, Seb Rennie, our Chief Commercial Officer, Rebecca Ackland, our Chief People Officer, and Tony Hudson on my left, our Company Secretary. I'll shortly ask Tony to run through some administrative matters, and he will assist with online questions from shareholders later in the meeting. I'd also like to welcome Trevor Johnston and Amanda Campbell from the company's auditor, PricewaterhouseCoopers. After five years, Trevor has recently rotated away from our audit but is available today online to answer any questions in relation to the audit for our most recent financial year. Amanda has taken over from Trevor as our PwC audit partner for the current financial year. And finally, Chris Dedrick from Computershare is also with us today.
Chris will act as the Returning Officer for the purpose of conducting and determining the results on today's resolutions. Before we move to the formal agenda of the meeting, I'd now ask our Company Secretary, Tony Hudson, to outline the processes for shareholders to vote and ask questions during today's meeting.
Thanks, Heith, and welcome everyone to today's AGM. Voting today will be conducted by a poll on all items of business. As Heith mentioned earlier, we have open voting on all items for those participating online and who are eligible to vote. For those online, you will see a voting icon is available on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. For those voting online, you are free to submit your votes at any time. To cast your vote, you should select for, against, or abstain for each resolution. Your vote on each resolution will automatically be recorded. There is no need to hit the submit button or enter button. Please ensure you cast a vote on all resolutions. Once you have voted, you will receive a vote confirmation notification on your screen.
You can change your vote at any time before the Chair declares voting closed. To change or cancel your vote, click the link labeled "Click here to change your vote" at any time before the poll is closed. For shareholders, proxies, and corporate representatives present in person, we will ask you to vote once we've gone through all items of business today. You will be able to do so by completing the yellow voting card provided to you when you registered for the meeting this morning. White cards are for visitors who cannot vote or ask questions today. Shareholders who do not have a yellow card are not entitled to vote on any item of business. The Chair will provide a warning before we close voting at the end of the meeting.
As Heith mentioned earlier, Chris Dedrick from Computershare will act as the Returning Officer for the purposes of conducting and determining the results of today's poll. We will announce the results of the poll to the ASX later today. As Chair, Heith will ensure shareholders have a reasonable opportunity to ask questions and discuss the items of business during the meeting. Because this is a hybrid meeting, we will first take questions from those physically present at the meeting, followed by audio questions from participants who have joined us online, and finally, written questions from online participants. If you're attending the meeting in person, only shareholders and the validly appointed proxies and corporate representatives who are given a yellow or green card upon registration are entitled to ask questions.
For those attending in person, when the Chair calls for questions, please raise your yellow or green card and state your name or the organization you represent before asking your question. If you're attending the meeting online, you can submit a question at any time during the meeting via the speech bubble icon on your screen. Type your question in the chat box on the right of the screen and then select "Send." Confirmation that your message has been received will appear on your screen. The Computershare platform also provides a facility for audio questions. To use this service, please follow the instructions below the broadcast window. The Chair will address your questions towards the end of the meeting. Your questions may be moderated, and if we receive several questions on one topic, we may amalgamate those questions.
While time constraints may prevent us from answering all questions, we'll do our best to address all your questions during the meeting. If you run out of time, we'll answer your questions via email or by posting responses on our website. Where appropriate, the Chair will ask Trevor Johnson from PricewaterhouseCoopers to respond to any questions received about the conduct of the audit. I will now hand you back to Heith to get into the substance of the meeting.
Thank you, Tony. I will now provide a brief overview of our performance during 2024 financial year and will comment on strategic direction, board matters, and the Australian media market. I will then ask our CEO, John Kelly, to update the meeting on the company's operating performance and business strategy. We'll then move on to the other business to be considered and to vote on the resolutions. As I mentioned earlier, this is my first AGM since becoming your Chair in March this year. I am honored to have this opportunity to speak to our shareholders today and to meet in person those of you who have joined us in our Sydney office. Let me start by acknowledging that the most recent financial year was a challenging and disappointing one for our company, and especially for our shareholders.
With persistently high inflation and slowing economic conditions, broadcast advertising markets were depressed for much of the year. Group revenue of AUD 499.4 million was 1% below fiscal year 2023, and underlying group EBITDA of AUD 66.2 million was 14.3% below fiscal year 2023. The board decided not to pay a final dividend in fiscal year 2024. While the group's leverage remains well within our banking covenants, the board considers that preserving cash to reduce the group's net debt is in the best interests of shareholders. We responded to these macro challenges with initiatives to transform our operating model to capture a larger share of available revenues while also completing our digitization CapEx program and resetting our cost base. And we expect to see the benefits of these actions in future periods.
Shareholders will also be acutely aware of the disruption caused by the non-binding indicative proposal received in October 2023 from the Consortium of ARN Media and Anchorage Capital Partners. The proposal was complex, requiring the breakup of highly integrated radio and other assets of both SCA and ARN to reallocate them to the members of the Consortium and to a new digital joint venture. Most of the consideration for SCA shareholders would have been shares in a reconstituted ARN, which was particularly difficult to value. Our board and our executive team engaged with the Consortium's proposal for more than six months, only for the Consortium, led by ARN Media, to withdraw its proposal in May 2024. I expressed my frustration at the time that the Consortium should have identified any material concerns much earlier in the process.
While our management team did not lose focus on daily business activities during this process, it did disrupt radio advertising markets, hampering our ability to monetize our audiences, and we delayed certain business transformation initiatives until the outcome of the Consortium's proposal was known. Noting these challenges, your board and executive team are committed to improving the company's performance and the return for shareholders in the current financial year and beyond. As outlined in a recent trading update to the ASX, we have made a positive start to the financial year. Our leading radio shows and podcasts are growing their audiences and attracting strong advertising interest. Our group revenue for the first quarter was ahead of the same period last year, with especially strong momentum in our digital audio brand LiSTNR.
We have made significant progress in reducing our cost base, and this work continues. In addition, with our major digitization program complete, our CapEx will be significantly lower this year. Our restructured commercial teams are consistently growing SCA's share of metro advertising revenues, and we continue to connect advertisers to the largest radio audience in regional Australia. John Kelly will talk more in a few moments about our positive momentum and areas of opportunity for further improvement. As we have announced previously to the ASX, we have commenced a process to dispose of our television assets. While this process has taken longer than we originally expected, we remain in active negotiations with several parties who are interested in acquiring those assets, and we will update shareholders as those negotiations progress.
Our discussions earlier this year with the ARN Anchorage Consortium, the time we spent considering a potential transaction with Australian Community Media, and our more recent discussions in relation to sale of television assets have demonstrated how the regulatory environment constrains innovation, efficiency, and the sustainability of Australian broadcast media businesses. Our largest competitors for audiences and advertising dollars are global giant digital platforms such as Meta, Google, and Spotify. But Australia's pre-internet regulation severely restricts our ability to compete with them on a level playing field. We celebrate our connection to local communities around Australia. But without regulatory change to enable consolidation and modernized regulation of Australian media businesses, that connection will, in time, become economically unsustainable. I would like to comment on a current topic in Australian media circles, and that is corporate culture.
Revelations about workplace behavior at some of our media peers have received high-profile attention in recent months. We have looked closely at publicly available reports about these matters and considered the corresponding risks and opportunities for improvement in our own workplaces. Your board firmly believes that SCA needs an inclusive and diverse workforce where all employees are treated fairly and enjoy a safe working environment. We believe that SCA's current workplace arrangements are sound and adequate to address these risks. But equally, we acknowledge the need for vigilance and for prompt action when problems emerge. The past year has seen significant changes in your board, with three long-standing directors retiring during the year. My predecessor as Chair, Rob Murray, along with Glen Boreham, retired on 27th March, and Helen Nash retired on 30th September.
Each of them served on our board for around nine years, during which they made valuable contributions to the board's decision-making, as well as being active on the board's committees. Helen chaired the People and Culture Committee for three years, and Glen chaired the Digital Transformation Committee from its inception and for a similar period. I would particularly like to acknowledge the contribution of Rob, who became Chair in the middle of the lockdowns and other challenges of the COVID-19 pandemic, and led a process to refresh the board and plan for future succession within the board and SCA's executive key management personnel. Of course, I also thank my continuing colleagues on the board, Carole Campbell and Ido Leffler, for their guidance and support during the year.
We were delighted on 1st October to welcome Marina Go as a director and as incoming Chair of the People and Culture Committee. Marina brings experience in executive and non-executive roles across a range of listed and private companies in diverse sectors, including media. I encourage you to support her election later in the meeting. Finally, on behalf of the board, I would like to thank our many stakeholders, including our leadership team and SCA's people, along with our advertisers, partners, and the communities we serve around Australia, for your ongoing support of SCA. In particular, I extend my thanks to you, our shareholders, for your patience and trust as we commit to delivering you improved returns in future periods. I now invite our CEO and Managing Director, John Kelly, to say a few words.
Thank you, Heith, and good morning again, everyone. It's a privilege to speak to you all today. SCA is a company in transformation. We can now clearly and confidently say SCA is all about audio. It is our focus. It is our strength. It is our purpose. With this sharpened all-about-audio approach, we can deliver more for our listeners, more for our business partners and advertisers, and in turn, more for our shareholders. We have three key audience pillars we are capitalising via our audio offering to reach the audiences that matter. One is the metro radio, 25-54 demographic, which we unquestionably and unequivocally dominate nationally. Beyond the capital cities, SCA reaches 70% of all regional Australians, and thirdly, we have the known and addressable audience via digital offering through our owned and operated LiSTNR ecosystem.
As Heith mentioned, we are in active negotiations with several parties with a view to disposing of our television assets, consistent with our all-about-audio focus. We expect to be able to meaningfully update our shareholders in the coming weeks as to the progress of these sale negotiations. Against the backdrop of a challenging macro and market operating environment for SCA over the last 18 months, we have remained focused on our core business and strategic priorities, and we now have positive operating momentum. That momentum is already showing signs of improved financial performance and will soon start translating and transforming into stronger financial performance and results. This transformation can be seen in the improvement in our results for the second half of FY 2024, with EBITDA growth of 6% on the prior period, with audio EBITDA growth up 8%.
We also recently released a market update on our results for the first quarter of FY 2025, which demonstrated our positive operating momentum has continued. In the first quarter of this financial year, total revenue of AUD 122.5 million was 1.5% higher than the same quarter last financial year. Our total audio revenue for the first quarter of AUD 100.4 million was up 4.8% compared to the corresponding quarter in FY 2024. This was driven by growth of 48.2% in digital and 1.1% in broadcast radio, and both these segments have delivered three consecutive quarters of share growth among our radio peers. Total audio sales in the December quarter are pacing for growth consistent with the first quarter. In metro radio, SCA has maintained its leading share of the core buying demographics for men and women aged 25- 54 for 27 surveys in a row.
LiSTNR continues to perform strongly, with over 2.1 million signed-in and addressable users. LiSTNR remains the number one podcast sales network in the October Australian Podcast Ranker, with over 7 million monthly listeners and over 21 million downloads. We are continuing to optimize our operating model supported by strong cost discipline. We maintain our FY 20 25 guidance for non-revenue-related costs, excluding non-recurring items, to below FY 20 24 costs of AUD 308.4 million on a current state basis. And we are continuing to invest in the advertising capabilities of LiSTNR, but CapEx in the current financial year is on track to be below AUD 10 million. We have been growing metro radio revenue share consistently since December 2023, and this revenue comes to SCA because we are the audio company which dominates the audiences that matter.
We have been the leading metro radio 25- 54 demographic for 27 consecutive surveys. Our audience across the Hit Network for total FM and DAB+ is 5.8 million. For Triple M, it's 4.6 million. Deduplicated, this gives SCA and FM and DAB+ total radio audience of over 8.6 million Australians. But that's not all. Our ongoing digital transformation and momentum means we reach even more people in even more places. We have 1.9 million monthly unique radio streamers generating a total of 12.6 million monthly listening hours. Importantly, too, LiSTNR has strong momentum. It is increasingly demonstrating its potential and appeal to audiences and advertisers to be able to sit at the heart of our audio ecosystem. We knew it would take time, investment, effort, foresight, and commitment to establish LiSTNR as the locally owned, locally built, locally run all of audio destination, and we are delivering.
LiSTNR reached EBITDA profitability in the final quarter of FY 20 24, and digital growth is only accelerating. Our digital audio revenue grew 42% last financial year, and we are on track to be cash flow positive in the current financial year. There are 7.2 million monthly unique podcast listeners in the SCA ecosystem, and LiSTNR boasts over 2.1 million signed-up and addressable users. We know FY 20 24 offered up tough economic and operating conditions, which impacted our performance. We have, however, taken control of the factors that we can, completing the digital transformation of our business and creating a future where we keep costs low without compromising our operational and commercial performance. So far, our business transformation program has permanently removed more than AUD 40 million from our cost base.
Our non-revenue-related costs came in below the AUD 310 million guidance for FY 20 24 at AUD 308.4 million.
We have not, however, compromised on our content nor our advertising products and how we reach the audiences we seek, being the audiences that matter. The LiSTNR Ad Tech Hub has been part of our digital transformation and is now driving premium commercial returns for our advertisers. There is a growing interest in the product and commercial offering because it enhances our advertisers' ability to connect with relevant audiences on LiSTNR and other digital audio distribution platforms. Advertisers want certainty. They want clarity, and they want compelling content. They are willing to pay a premium to connect their messages to targeted and addressable audiences with measurable attribution. We already have compelling evidence that this is delivering for us and our advertisers. Digital revenue grew 57% year-on-year in the second half of FY 20 24, directly coinciding with the launch of the LiSTNR Ad Tech Hub.
The Ad Tech Hub is now included in over 33% of LiSTNR's digital audio campaigns. Beyond our compelling content and advancing technology-based offerings, our people are our power, and they are what makes SCA one of Australia's leading media companies. We are implementing processes to ensure our people are happy, productive, engaged, and working towards our business transformation targets. We are committed to retaining the talent that our audiences and business partners love. The Hit Network's Carrie and Tommy have been Australia's number one drive show across the nation for much of 2024. The Fox Breakfast Show with Fifi, Fev, and Nick continues to hold on to a loyal Melbourne audience and deliver winning results despite new entrants to the market. And we recently re-signed Brisbane's number one breakfast show, B105, Brisbane's Stav, Abby, and Matt to long-term contracts.
They are about to celebrate seven years on air together and have consistently led the ratings in 2024 in one of the tightest and most competitive metro radio markets. On the Triple M side, we've made some game-changing programming announcements, which sets us up for a 2025 calendar year of further growth and momentum. Triple M has grown faster than any network in the past three years. Triple M is the home of sport, comedy, banter, and greatest hits in our cities, but it also is a key part of our regional communities, where it is leading the conversation and dominating the ratings. Our recently announced new Mick Molloy and Nick Riewoldt-led Triple M Melbourne Breakfast Show, Mick in the Morning with Roo, Titus, and Rosie, will deliver a local, lovable laugh fest with some of the city's favorite personalities for audiences and clients alike.
The move of Mick Molloy to Melbourne Breakfast, of course, means that we have an exciting opportunity at Triple M Sydney in the key breakfast slot, which we'll be announcing soon. Both Triple M Sydney and 2Day FM are active in their local communities, embedded in the city's day-to-day and cutting through in the key Western Sydney districts. This means that not only are listeners engaged in the communities, the conversations, and the contents, but advertisers are highly visible, get cut through, and get results. We'll be continuing to be the industry-leading developer for exciting new talent for radio, as we have shown in Adelaide with Emma G and Bernie Vince, in Perth with Katie Lamb, and 2Day FM with Jimmy and Nath, in Melbourne with Nick Riewoldt, and nationally with Nikki and Lucy and more to be announced soon.
We're also gearing up for a massive summer of cricket on Triple M and a host of exciting program announcements across our network, and then, of course, there's our ever-growing suite of high-ranking, advertiser-friendly podcasts which continue to engage audiences, produce compelling content, and redefine the audio landscape. Australia's number one podcast, Hamish & Andy, is proudly a long-term LiSTNR show, and its peak monthly audience is over one million listeners. As well as established and well-loved talents such as Hamish Blake and Andy Lee, LiSTNR has consistently and successfully backed emerging and game-changing talent. Our growing podcast talent roster of strong female voices, including Nikki and Lucy's Happy Hour, Chloe and Ellidy Darling Shine, Steph and Laura's KICPOD, are some of the most exciting and successful podcasts in the country.
Plus, we recently signed the hugely popular and thought-provoking The Imperfects, who will move to LiSTNR on 7th January. Our podcasts lead the national conversations on news, sport, entertainment, and everything in between. The future is LiSTNR, and I couldn't be more excited about what's to come. I thank our shareholders for their ongoing support as we drive our business towards improving cash flow earnings and consequently shareholder returns. At a personal level, I would like to thank the board and our executive team for their hard work and support during FY 20 24. I also want to acknowledge the entire SCA team for the commitment and passion for our company. Finally, I would like to reaffirm our commitment to consistency, our positive revenue and earnings movement and momentum, and our all-of-audio strategy. We have the building blocks for success in place.
Our digital transformation is now reaping rewards. Our products regionally and in the metro markets are unrivaled. All this combined makes me and the wider SCA team confident and excited about the opportunities ahead. Thank you.
Thank you, John. We will now move to discussion of the formal items of business set out in the notice of meeting. The notice of meeting has been made available to all shareholders and is also available on SCA's website. The explanatory notes in the notice of meeting explain the background to each item, each of the items of business. Shareholders have had the opportunity to consider those matters, and I will take the notice of meeting as read. However, I do want to make a few comments on today's director elections and succession planning. As I said earlier, I am offering myself for re-election today, and Marina Go is standing for election for the first time.
The notice of meeting outlines the board's recommendation for shareholders to vote in favor of our election. Marina joined our board on 1st October. We identified and selected Marina after an extensive search led by an external search consultant, her appointment followed the retirements of three directors since our AGM last year, and a conscious decision by the board to reduce our size while ensuring we have sufficient depth and breadth of skills for SCA's needs. Marina has brought significant knowledge about Australian media as well as leadership and governance experience, all of which complements the attributes of other directors. I commend her election to you. I will shortly ask Marina to explain to shareholders her interest in the company and how she will contribute to its future success. But first, let me say a few words about my own interest in continuing as your chair.
It is an honor and privilege to stand before you today seeking re-election to the Southern Cross Media Board. Unanimously appointing me as chair, your board believed I am best suited to lead the transformation oversight of one of Australia's leading media companies. As your shareholder representative, I believe it is incumbent on myself to ensure your board firstly grows the monetization of our increasing market share, secondly resets our cost base and capital structure, thirdly support management's talent attraction and retention initiatives while improving on our company culture, and finally repositioning this business for improved and sustainable shareholder returns. Having now been on the board four years and eight months as your chair, I have had the insight by participating and in some cases leading all of the company's board committees, both past and present.
I also bring to this organization experience and capability in leading and guiding companies through significant change, understanding regulated market environments, dealing with disruptive and innovative technologies, strategy development and M&A activities, and working in the Australasian media market landscape. Finally, I believe that I have the determination, passion, and capacity to assist the team to drive growth and shareholder value for Southern Cross Media. Thank you in advance for your support. Marina?
Yes, thank you. Good afternoon, shareholders. As I said earlier, I joined the Southern Cross Austereo board on October 1, 2024, and was appointed chair of the People and Culture Committee. I'm also a member of the Audit and Risk Committee. My executive experience included leading a digital media company as chief executive officer and leading a global joint venture multimedia organization with a reporting line to the U.S.
I have been leading and governing digital media businesses since 2008 because, as we all know, contemporary media no longer resembles traditional media. As a non-executive director, I have served as chair and non-executive director of ASX-listed companies, large private companies, and not-for-profit organizations across a range of sectors, including retail, energy, infrastructure, and health. I'm also an experienced People and Remuneration Committee chair, Sustainability Committee chair, and Audit and Risk Committee member. I have deep sectoral experience in media, having spent my entire 30-year executive career in the industry and five years on the board of the Walkley Foundation, including a term as chair of the board. I was also the inaugural chair of the Centre for Media and Innovation at UTS. I'm deeply interested in innovation, convenience, mobility, and growth-focused customer-facing business models, and have a passion for working with purpose-driven companies.
Those experiences and interests have shaped my board portfolio to date. Through my current role as Chair of Adore Beauty, I've had a front-row seat to the power of digital media and the podcast to influence customer behavior, and the recent U.S. election proved the same. I believe that Southern Cross Austereo has significant opportunities ahead and a strong leadership team in place to realize the business's potential. I am passionate about the future of audio and am committed to the company's long-term strategic direction that will continue to enable listeners to access their audio information and entertainment needs and wants when, where, and how it is convenient for them.
I believe that my contribution to the Southern Cross Austereo board is through my deep media sector experience in both content creation and governance and leadership, as well as my customer lens and experience with digital technology, reputational risk, leading remuneration and sustainability practices, stakeholder engagement, and diversity and inclusion. I am also a person who values integrity, and the media sector is in desperate need of boards committed to the highest ethical standards that will always make decisions to look after their people and culture and ensure a sustainable future for the company because that is not only in the best interest of shareholders but important for a healthy democracy. I have the time to devote to my role as an independent non-executive director of Southern Cross Austereo, as I have demonstrated since joining.
I hope that you will elect me to the board as Southern Cross Austereo is an organization that I'm honored to serve. When I consider joining a board, one of the key decisions for me is the quality of the chair and directors. The chair and directors of Southern Cross Austereo have the necessary skills to govern this organization and navigate the various levels of compliance and regulation and drive a new media growth strategy. They are diligent, courageous people of the highest integrity, some of the most professional directors that I have worked with, and committed to Southern Cross Austereo's growth opportunities and competitive advantage, and it's an honor to serve alongside you. Thank you.
Thank you, Marina. Let's now turn to the other items of business on the agenda. Rather than step through each item of business, I'm going to accept submitted questions on all items of business now. The online platform is still open, so you have some time to submit a question if you have not already done so. As I mentioned earlier, the poll is open on all items. If you haven't yet voted, I encourage you to do so now. I will close the voting at the end of question time. The number and percentage of valid proxies received before the meeting are now shown on the screen. These proxies have been reviewed in accordance with the Corporations Act and the ASX listings rules, and any proxy votes required to be excluded by those requirements have been excluded from the numbers on the screen.
The next slide shows the valid proxy votes received before the meeting for each item of business. As shareholders are aware, there is no requirement for a vote in relation to adoption of the financial report, although we are, of course, welcome any questions on it. We are aware that two proxy advisor firms, ISS and CGI Glass Lewis, have published recommendations in relation to the business of today's meeting. Both have recommended that shareholders vote in favor of all resolutions. This next slide will stay up for the remainder of the meeting. You will see that shareholders have cast a significant percentage of votes against some of today's resolutions, and in particular, against my re-election, against the grant of performance rights to our managing director, and against the adoption of the remuneration report.
While my re-election and the grant of performance rights to our managing director appear likely to be carried, shareholders will be aware that a vote of less than 75% in favor of adoption of our remuneration report will be a first strike under the Corporations Act. The outcome of that resolution remains uncertain and will be influenced by the voting that takes place at the meeting today. Two of our substantial shareholders have cast a significant majority of the votes against my re-election and the remuneration report. As your board, we accept the feedback that our shareholders want our company to improve its financial performance and to produce higher and more reliable returns for shareholders.
As outlined in the notice of today's meeting, we believe that your board has the right size and mix of skills and experience for SCA's needs and specifically to support our executive team to drive improved returns for shareholders in future periods. In relation to the remuneration report, let me first note that we have reduced the size of the board as well as the base and the committee fees payable to non-executive directors with effect from the 1st of July this year. We believe that our current executive incentive plan provides a simple and direct way to link executive performance and reward to generation of sustainable positive returns for shareholders. The plan includes a range of financial and non-financial measures, with 60% weighted towards financial measures. The non-financial measures include execution of strategic projects designed to drive future financial performance and cultural and behavioral influences.
I have already spoken today about the importance of setting and insisting on high cultural standards in Australian media. In the financial year just gone, our performance fell short of our financial targets, and your board, in consultation with management, decided that no cash nor performance rights should be awarded to the company's executives. We made this decision despite the executive team achieving up to 38% of their bonus objectives for the past financial year. This decision has affected our executive's remuneration not only in the current year, but also will do so in future periods during which performance rights will otherwise have been eligible to vest. We believe this was a responsible decision taken in the best interests of shareholders. You've heard from John Kelly earlier today that the positive momentum from the second half of last financial year has continued into the new financial year.
And of course, we look forward to in future years to delivering ongoing improved performance for shareholders and rewarding our executive team accordingly. That said, irrespective of whether we receive a first strike today in relation to our remuneration report, I have asked Marina Go, as the new chair of our People and Culture Committee, to review our executive incentive plan and to consider whether we should make any changes to ensure it provides appropriate incentives to drive improved performance and returns for our shareholders. Let's now turn to questions. And I will start with this room in Sydney. Are there any questions from shareholders in the room? And I need to flag we do have a microphone so everyone online can hear you. Thank you.
Good morning. Just like to make some comments, please. Look, we all accept the traditional - I'm sorry, David Kingston, K Capital Group.
Thank you, David.
Look, we all accept that traditional media is challenging. Lots of competition for ad dollars, particularly from the international digital giants, and there's so many ways to listen to music and podcasts these days. Also, regional TV is difficult with such a large percentage of the revenue going to the metro networks, but notwithstanding that, the performance of SCA over the past five years has been extremely poor, with massive shareholder value destruction, and I'll talk to a few of those issues shortly. Look, broadcast radio is flat to down in real terms. Yes, digital is up, but off a very low base, and it's incurred a huge amount of money to get to where you are today. Operating costs, in my view, are too high. We'll come to that, and CapEx has been far too high over recent years.
Now, that's culminated in a lot of shareholder value destruction and poor free cash flow. As you said, Chair, it's culminated in a cancellation of dividend because there's not enough free cash flow, and debt is higher today than it was a number of years ago. Look, I do appreciate that John Kelly has only been CEO since 1 July 2023, and there have been a lot of board changes in the past year. So everyone's inherited a lot of legacies and bad legacies. But a number of the comments I'm making today, to be frank, are attributed to people who are no longer sitting up in front of us. I think there have been some bad mistakes in previous years. So let's undertake a bit of a diagnosis. What on earth has gone so badly wrong? Southern Cross Media started as Macquarie Media.
In 2004, it acquired RG Regional Radio and DMG Regional Radio for over AUD 360 million. IPO in 2005. In 2007, SCA acquired the regional TV business from Southern Cross Broadcasting, run by Tony Bell, for a net price of around AUD 900 million. Current value is near zero, the donut. Wow. In 2011, SCA acquired the Village Roadshow Controlled Austereo Metropolitan Radio business for an enterprise value of near AUD 1 billion. I'm familiar with a fair bit of it because I was personally a director of Austereo and the Tony Bell-managed Southern Cross Broadcasting. We created substantial shareholder value, but again, I acknowledge that was much easier times for traditional media. Where are we today? SCA has a market cap, a lousy AUD 125 million.
Relative to the purchase price of the three key groups of assets I have referred to, a couple of billion AUD of shareholders' value has been torched.
The balance sheet itself shows accumulated losses of AUD 1.3 billion. When we add the net debt of AUD 108 million and the AUD 84 million GTN unearned revenue, which is quasi-debt, the enterprise value today is around AUD 315 million. But let's take off the emergency capital raise that Blackley did, raising AUD 170 million at AUD 0.09 a share in 2020. It really leaves a pitiful enterprise value today. What happened in 2020 with the embarrassing share price? There was a 10 for 1 share consolidation, which means that today's price of AUD 0.55, when adjusting for the consolidation, is AUD 0.55 below the AUD 0.09 emergency rights issue raised. Embarrassing. Five years ago, and this is a critical issue for the board, please to address, the SCA share price adjusted for the 10 to 1 consolidation was AUD 10 a share.
It was trading about AUD 1, so AUD 10 on a consolidated basis. It's now AUD 0.55.
Your predecessors, most of you have only been on the board for either recently, Marina, or for a couple of years. Your predecessors have torched 95% of the value of the company. Now, you're not alone. Traditional media is tough. I accept that. But I think this company has made some bad mistakes in recent years. Let's look at a couple of specific issues. GTN, AUD 84 million of non-earned income, is expensive funding, and it complicates the accounts. March 2021, you lost the Nine feed. Critical factor. You ended up with a Ten feed for regional TV, which obviously reduces revenue. But I think you should have acted more quickly and sold TV very promptly when it was worth more money. Instead, there was prevarication. You first announced an approach in March 2022 but didn't crystallize a sale.
We're now looking at a sale of, according to the press anyway, near zero. Other mistakes, buyback announced in March 2022 with a price of around AUD 1.70 a share. "To enhance shareholder returns." But of course, the opposite happened. It's hurt shareholder value. Good to hear from John that LiSTNR is improving, but off a very low base. But there's been a huge spend on that over the years, whereas your competitor, ARN, has spent less on its digital by outsourcing it. Look, there's been very large spends on offices at substantial cost. There's an expensive long-term transmission contract. Recently, the dividend cancelled. So it's critical that the board now focus on urgent cost reduction and free cash flow, which is the holy grail of any company so that debt can be reduced and dividends restarted. Look, there's still hope, guys, ladies and gentlemen, sorry.
If we look at it, you've still got substantial broadcast radio revenue and substantial EBITDA, so it's not too late to fix this company. But it has had a disappointing FY 20 24 with a deficit to revenue and profit targets. But you've still got FY broadcast radio revenue of AUD 366 million and EBITDA of AUD 87 million. Now, a fair part of that went in losses on digital, but it's good to know that digital is now finally break even. There's also hope for shareholders because on an enterprise value of AUD 315 million, it's a multiple of 3.6x broadcast radio EBITDA of last year. Let's look at digital. Last year, a loss of AUD 11 million. Hallelujah, forecast to be positive this year. But as the movie says, it's absolutely time for digital to show us the money. CapEx has been so high for many years.
Thankfully, FY 20 25 target CapEx is down to AUD 10 million. Wow, that's a reprieve. FY 20 25 target costs are targeted to be below FY 20 24. But John, can you do a Donald Trump, Elon Musk, and reduce costs by 20%-30%? That's their target for the American government to spend. I think a small reduction in costs is going to not move the dial. I think you need to pull out the red pen. Concerningly, in the first quarter of this year, broadcast revenue only increased 1.1%. That's below inflation. Look, I won't talk about the recent offers. I accept. I think the press is misleading there in a number of respects. My friend Yoni, whoever fed him, probably will get a smack because obviously the article on Saturday is misleading and unfair.
I'm delighted, Marina, that you are going to get the votes because you're a high-quality person and you absolutely deserve to be on this board. I think you've got a key role to play. I think Yoni's focus in his article on the bids is a little bit misleading because they were highly complex, pretty questionable. They were highly conditional, a lot of shares that were moving around. So I think that article wasn't particularly accurate. Sorry, Yoni, normally you're spot on, mate. So look, a couple of questions. I'd really like to hear from John and the board. What percentage of costs are you looking to remove? Because ultimately, a company is about revenue minus costs. And the revenue of broadcast is challenging. It's going to decline unless there's a structural change. And digital, yes, goes up, but off a low base.
So the revenue arguably is going to be flat with broadcast challenged and digital going up. The real opportunity comes in costs. And I think you've got to think a bit like Elon Musk and think outside the square, do things differently. Like who in history would have thought of taking a 20%-30% off the U.S. government spend? Only Elon Musk. But again, can media, traditional media, think outside the dial and really bring out the red pen? So I'd be interested to know what percentage of costs you think you can remove. I would suspect some of the many regional radio stations are pretty marginal in terms of contribution to profit. All over the place, you've got a huge number of them, but quite often they generate a very small amount of revenue. My second question is on LiSTNR. In part, understandably, it's cannibalizing broadcast radio revenue.
That's understandable. You've got to move there and you've moved there. I think you've probably spent far too much in creating it, but that's money spent and burnt. But I'd like to hear from John or the board. What do you think it's going to really contribute in three years? Is it going to go up 10 times? Because when we hear all the percentage growth levels, they're a bit meaningless because it's coming off a very low level. Do you think in three years' time that digital is going to be half broadcast radio? It really needs to shoot the lights out because it's cost you a lot of money to put in place, and I think it needs to finally step up and deliver. So yep, that's really my questions. Thank you for hearing me out. Thank you.
Thank you, David. Just before I handed John on your specific questions, I just wanted to make a comment that I accept the commentary at the start of your question. This board is absolutely focused on right-sizing this business for growth. We accept that there actually is cost out, but it's also about monetizing in a revenue sense the opportunities we have in front of us, both with our regional brands, our metro brands, and with LiSTNR. Your comments around the CapEx and cash, free cash flow is the most important aspect of our financial metrics, and the management team are highly alert to it and are incentivized on that number amongst others accordingly. But specifically, you had some questions that John can talk to.
Yeah, thank you, David, and thank you, Heith.
Yeah, and David, we've had a conversation probably about a month ago on some of these themes that you brought forward, and I think a lot of the themes we concur with. In relation to costs, clearly we've given guidance in relation to 2025, which is below last year, which in itself, given that inflation's running 4%-5%, sees us taking costs out of the business. I mentioned we've taken AUD 40 million of costs out thus far, and you're right, that's not enough. So our intent is to continue to look at our cost base across all elements of our business. Clearly, with the hopefully impending sale of TV, that gives us a chance to take out some significant costs from the business as well, from our TV assets. But it's got to go further than that in relation to our overall audio business. I concur with that.
So we'll be giving further guidance on that for 2026 and beyond as to where we sit with that moving forward. And we're doing a lot of work in strategizing on that at the moment as to what elements we can look at. That's the first question. The second question in relation to LiSTNR, we talk about being all about audio, and we do that advisedly because it is the combination of broadcast and digital together, which is our future. It's not about broadcast in itself, and it's not about digital in itself. It's the combined audio offering. Audio as a sector is considerably underweight in relation to the intention that audio has versus the advertising revenue that audio receives in the media market. And all the players in audio agree with that. It's around 30%, 34% is what the intention is, and the spend level's 8%-9%.
So we need to work collaboratively as an industry to raise the sea of audio and then share the spoils amongst the various players moving forward. That's ARN, that's Nova, that's Nine Radio, that's ourselves. In relation to where we sit, I hear your comments on LiSTNR. LiSTNR, it's a fully built, fully owned. We own our own pathway in relation to what we're building with LiSTNR. A lot of the CapEx we're spending at the moment is on the LiSTNR Ad Tech Hub, which, as I mentioned, is fueling the growth we're seeing, the above-market growth we're currently seeing in digital audio. We're growing circa 40%, 45%, 50%. The market's growing 25%-30%. In broadcast radio, we're growing 1%-2%. The market's actually back 1%.
We're gaining share in both, but we expect the combination of digital and broadcast to be certainly above CPI for the coming years. I expect that digital as a fueling agent. I mean, in simple terms, if we can keep broadcast 1% or 2% and get our growth over digital audio, we'll see digital audio becoming a very material part of our business in the years ahead.
Thanks for that, John. Look, I'm cautiously optimistic you can deliver. But I just remind the board that certainly, obviously, responsibility perhaps some lies with the previous chief executive, some with board members who are no longer there. At the end of the day, talk is cheap. It's easy to sit on the rostrum and come up with platitudes and euphemisms about growth and whatever.
But at the end of the day, in the last five years, this company has destroyed 95% of shareholder value. Now, that's totally and utterly unacceptable, even in a tough media environment. So look, I think this company can turn it around. I think it's great you've got a new set of directors or some new directors. It's great that John's taken the role being a finance guy. I think you'll focus on the numbers rather than the hype and the waffle. But look, although all I would ask is that you learn from the debacle in the last five years. Really, I think it's the last chance for this company. It's got some great assets. It's got a lot of revenue, a lot of EBITDA. But unless you show the shareholders the money, there'll be further changes that will have to be made. So I'm optimistic, but good luck.
The next year, I think, is pretty crucial. Thank you.
Thank you, David, for your comments. Are there any other questions from the room? There's one at the front here. We'll go to the one at the front, and then there's one at the back, and then one at the front again.
Given the recent...
Could you just announce who you are?
Oh, sorry, Jason Taleb, shareholder. I own about 1.5% of the register. Given the recent performance and the impact on management remuneration, what's the morale of the management team like at the moment?
Thank you, Jason, for your question. Maybe John can specifically answer that. I think we certainly, for the avoidance of doubt, that was actually a factor in our thinking. It's one thing to actually have the financial outcome. It's another thing to make sure that we believe that the management team are duly motivated to perform for all the reasons. But John, you could perhaps talk to the entire leadership team.
Yeah, look, you clearly focus on the future, and we're focused on hitting out all our targets for shareholders and candidly for our own remuneration as well. But I think we are confident in the strategy we're building. We're confident in how we're executing at the moment. So really, 2024, the situation there in relation to non-paying of bonuses, we've moved on to 2025 pretty quickly and trying to hit all our targets there. And it's my job and it's the leadership team's to keep everyone up and engaged in a fully conversant and collaborative way in order to achieve that. So yeah, we're positive. We're positive about the future, and we're positive about the future direction of the company.
So you haven't lost any talent, any management talent as a result of that?
No, we haven't. No, we haven't. No, we've made some changes in terms of certain retrenchments in terms of cost out, but no talent and no regretted departures in that respect.
And just, sorry, can I ask something? That's fine. I think you sort of touched on this, but obviously, in terms of ad revenue, there's been both structural and cyclical factors going on. But from what I heard, you believe that there will be a cyclical rebound of some sort that you expect market revenue to grow above inflation rate?
Yeah, we do. I mean, I think you speak to anyone in the media sector. It is still a cyclical game at the end of the day. And yes, the cycle has been very difficult three to four years, but we do believe with the inevitable return to some normalcy with the interest rate cycle, that we'll see a return to more normal conditions. So that on top of the growth and growth of audio, we're confident in our own sector.
Thank you, Jason. And then there was one at the back, that gentleman, and then I'll come to the front to you, sir.
Good morning. Fred Woollard, shareholder. I heard rumors, which I'm interested to hear you tell me if they're false or true, that in the event of a change of control at SCA, there's a payout to ARN on the contract. Is that true? And if so, how much would we have to pay ARN in the event of a change of control regarding that contract?
Certainly, all our contracts, for the avoidance of doubt, our contracts are commercial in confidence, as you would expect. We have a number of disclosures in our accounts, and that's primarily around the broadcasting contract, less so ATN. I don't believe we can specifically answer the question you're asking. There's certainly, to your comment on rumors, I'm not going to comment on rumors other than we have commercial contracts that are commercial for that reason. And then there was a question at the front here.
Good morning. I'm Mark Hardy. I'm a shareholder. I'd like to delegate my question to Roger.
Of course, Mark. Yeah.
Mark's got AGM laryngitis. So the queries I've got, or no queries, I'd like to congratulate the chairman for surviving up to date to this point.
John Kelly, I followed the media sector for 40 years, and he's no doubt the best person in the field that was available that we could appoint. I think he'll be able to carry the war to ARN, Nine, sorry, competently very well on this on the board already, turned the market share gains. Particularly Grant Blackley, who set up LiSTNR, has now proved to be a pretty good success. The query I've got is that there's two more board members that are still not in the media sector. Hopefully, the chairman will lead a further renewal of the board. There are people hanging around or being sacked who are excellent in the entertainment field. A few names, James Warburton, basically, we are an entertainment medium where people selection is actually incredibly important.
And so I know at least one of those people have asked to be on the board of this company. So I commend the board to go really fast and do a further renewal and employ people who have been in the entertainment field to begin with. The second question I've got is in relating to the first quarter reporting. As you've got, TV is an asset that held for sale. The reporting should now consist of audio, less the cost allocated to audio. The question is, did the first quarter EBITDA? I don't want to do the deduction X - Y, but it was so simple for you to actually give some EBITDA guidance on the assets you hold, not the assets you've got for resale, and give us some guidance on the year to date.
Sure. Thank you, Roger. Let me just start with your first question, which was around board skills matrix. I take on board your comments. I would say that, amongst other things, notwithstanding the contemporary media landscape experience that you call out, we balance that with other things that we believe the board needs: strategy, risk, financial acumen, access and understanding of innovation, technology, disruption, and the likes. So for us, it's actually a holistic board skills matrix, and we've looked at the board directors that you see in front of you with regards to do we have the right skills for what the business needs today, but more importantly, our three-year plan on where we will be tomorrow.
We believe we do, but having said that, as you said in your comments, there has been considerable change around the board, and we expect that whether it's board or KMP, we will continue to change based on the needs of the business going forward. To your second comment around the financials, as far as I'm aware, this is the first time we've provided a quarterly update. We did that because, obviously, governance reasons, but perhaps more importantly, because the business is actually trading very well. And I think John's alluded to that in his AGM speech today. The ASX guidance is out there. We don't actually provide quarterly EBITDA or impairment results.
We will, of course, provide the half-year results as we get into finishing the half-year, but our guidance is very much, it's clear in John's speech what our guidance is, and it's well ahead of the last half and the last year.
Just like a follow-up on the future trend in this company, we have news talk, music talk, sports talk as the three main entertainment components. You've got Macquarie broadcasting and news. I know that in the last decade, surveys of radio have maintained a 24%-26% share of consumers in Australia getting their news from radio, unlike publishing, which has gone backwards by a country mile and free-to-air TV. It's held us on against the onslaught of the digital.
Given the number of stations you have, that's all the DAB frequencies plus double FMs in five capital cities versus your enemies with much less, has a group considered expanding its news services component using one of the many surplus stations you have to have a proper go with that. But it's a sector that's not declining in terms of consumer interest.
Yeah. So again, thank you for your question. As you know, with 99 FM and DAB stations across the country, we have significant penetration, but also areas for opportunity. I think John highlighted in his CEO report there's particular development around our talent activities, and specifically whether it's news, sports, music, and the likes. We're continuing looking as a board around which sectors or segments, rather, we want to operate in. At this stage, we've only announced all the activities. And John, perhaps there's something.
Yeah, look, I just wanted to add, I think one of the areas, and you're right, we have looked at it in the past. You recall probably three years back, we had a station dedicated to news. The focus for news and documentaries is really LiSTNR in that space. So we have The Briefing, which is a daily news and information show, which comes in every morning. We have partnerships with Schwartz Media with 7am. So we're very much playing in the news and information space in the on-demand area in podcasts as opposed to our radio broadcast area.
Thanks, John. I can't see any other. David, if you don't mind, I'll come back to you because I've got a number online, but I will come back. But the gentleman just behind Roger, sorry, I can't.
Let the young guy jump in, Charlie Kingston.
Just a few questions, please, specific to digital and LiSTNR. John, according to your background as COO, you were in charge of digital. And I appreciate we've spoken a fair bit about it today, but could you just quantify how much has been invested into digital and LiSTNR? I think if you add up all the sort of the recent losses, it's over AUD 55 million. I'm sure some of expenses have been capitalized, etc., but how much have we spent to date? Just noting that we have decided to own as opposed to rent in the case of ARN, our system with LiSTNR. And then going forward, do you have a return target that you could provide? Because I'm no expert. You guys are the experts, clearly, but it does seem very tough to monetize podcasts and the likes, like Spotify. I think struggles to monetize it.
I think maybe just earning a bit of free cash flow now, but it does seem like the talent are the only real winners to date. Joe Rogan with his $100 million payout for signing on with Spotify, etc. But how much have you spent to date, and what can we as shareholders actually expect for that to return for us going forward? Could you provide some targets, please?
Yeah, look, in relation to LiSTNR, we spent, yeah, look, your math is not far off. Probably AUD 50 million-AUD 55 million is probably the amount we spend on LiSTNR to date. As you know, we've indicated a breakeven profitability in Q4 of 2024, and we expect it to be cash flow break even for 2025.
In relation to our targets moving forward, I won't go into the details in terms of our three-year forecast, but 30% margin is what we target in relation to our digital audio revenues. Now, you may say that seems high, but we actually are repurposing radio podcasts, so live radio shows, which also on radio podcasts. We have agreements with the likes of Wondery and Stitcher in the U.S., where we actually get an agreed revenue share not that far away from those numbers. And most of the podcast deals we do these days have audience guarantees attached to them. So they're revenue shares with audience guarantees. So we're not paying away dollars to the talent, as perhaps was the case probably two or three years ago.
The likes of Joe Rogan and in our case, Hamish and Andy, there's a couple of outliers, but generally, it's relatively good margin territory.
So 30% EBITDA margin, is that right?
Correct. Yeah.
Thank you.
Noting that the CapEx is now in the main being spent. Yeah, and we're down to AUD 10 million as a group.
And then same, just on the topic of margins, noting that radio does still have some very healthy EBITDA margins, albeit it's clearly a lot that comes out below EBITDA, but I think in 2018, the radio EBITDA margins were around about 34%. Today, they're closer to 24% radio before you adjust for the digital losses, but it's still a very healthy margin before overheads in what some believe to be a shrinking or struggling tough industry with radio. But NZME, the New Zealand-listed dominant radio player, their EBITDA margins are 13%-14% and have been that number for many years, and they've got a target of a few percentage points higher.
But as has been mentioned, there's clearly a lot of revenue that the company still generates, which is great, but I was just hoping to get your thoughts on where do you think that EBITDA margins, noting you've got a digital target, but is there a similar sort of target for radio, given that's going to be the key driver as to what we can actually expect to return going forward?
Yeah, I'm not sure New Zealand's a good comparison because that's experiencing significant difficulties, as you would be well aware, but 20%+ for radio and 30%+ for digital, that's sort of our targets.
Great. Thank you. And then free cash flow, I think, Mr. Chair, you said that was part of the incentive.
Yeah, there was.
I couldn't actually see anything. There was EBITDA, there was EPS, but free cash flow?
Yeah, for this financial year, there are a number of the financial targets for fiscal year of 2025, the year we're in. There is actually EBITDA, impact, and free cash flow KPIs, if you like, that the management team are accountable for and measured on a monthly basis.
Thank you. And then final question, Heith, when you or the board turned down the revised ARN proposal, SXL was trading at around AUD 0.85. Today, we're at AUD 0.55 or below. And I appreciate, again, it was all scrip, and that's moving around, and ARN's a lot lower today, but on that scrip, the same ratio, SXL would be valued probably 20% more under that proposal, and then there's the new SCA, etc. But I know that you only have 120,000 shares, which is worth around AUD 66,000 based on today's price. And to be honest, the board doesn't really have much alignment.
Everyone seems to be well below sort of their annual salary. John, you've been here since 2016, I believe. You have a touch below 200,000 shares, a bit over AUD 100,000. But when that revised proposal was declined, it was said that it didn't deliver fair value to shareholders, but I was just hoping to get your thoughts. Maybe you could quantify what you think fair value is, given it does seem a bit hollow, given you don't have all that many shares. And I don't think anyone's hoovering up any shares. I'd hope to see that. I appreciate there's some windows in which you can and can't buy, but maybe going forward you will. But any comments on what you actually think the fair value of the company is, please?
Sure. Well, let me just address your two questions there.
The first was, for the avoidance of doubt, we did not reject the ARN offer. ARN's partner, Anchorage Capital Partners, pulled out. ARN pulled out of the process. We were very clear. We were fully engaged, and we were looking at the offer, and we went through full DD. So Southern Cross Media did not pull out. It was ARN and their partner that pulled out, and we were supportive of it. There were other offers from ARN that were to effectively swap brand assets between the two listed companies, and we didn't see value for Southern Cross Media shareholders because Southern Cross Media shareholders already own access to the largest radio distribution business in the country. To the second part of your question with regards to ownership, since October of 2023, this board, both its predecessors and the incumbent board, inclusive of the KMP, have actually been under blackout.
We've been under blackout because, as I mentioned in my speech, we've had multiple offers from multiple parties, and we're currently in the process of a TV divestment. When we do actually have a window when we can trade, I expect myself and my fellow directors, together with management, to actually be buying shares. But unfortunately, for the last 12 months, say, we haven't been able to actually have appropriate governance windows to be able to do that.
Thank you. And it was the revised ARN proposal that I was referring to, but thank you.
Yeah. So I'm going to go to—we've got a number of questions online, and then I'll come back to the room if that's all right, Tony.
Yeah, thanks, Heith. We do have a number of questions online. The first one is from Stephen Mayne. Our name is Southern Cross Austereo, and after Macquarie Radio Group, rather, Macquarie Group floated us with a AUD 1 billion equity valuation in November 2005, we've now racked up AUD 1.32 billion in accumulated losses, with potentially more to come, given the latest AUD 224.8 million annual loss slashed down net assets to AUD 202.8 million.
The market still thinks that is overdone because with the stock price at AUD 0.54, our market cap is only AUD 139 million, and the outstanding debt of more than AUD 100 million looks pretty ominous. Given the CEO has been with the company since 2016, could he have the first crack at explaining who got the circa AUD 1.4 billion which shareholders have lost so far? With the benefit of hindsight, was Southern Cross in 2007 or Austereo in 2011 our worst overpriced acquisition in terms of burning hundreds of millions of dollars for shareholders?
Thanks, Tony. And Mr. Mayne , look, I just think for the avoidance of doubt, this business is actually a particularly. We form the view that this is a particularly successful business today and has significant opportunity that we've already heard and discussed at the AGM. So I'm not sure there's much benefit in going through the history and the legacy. I will point out you are right, and with regards to his comment around the financials for the last financial year, as shareholders would have seen in the annual report and as disclosed to the ASX, there was an impairment loss of about AUD 326 million or AUD 326.1 million in our broadcast audio segment. And there are reasons why we did that and rationale methodology that is available in the annual report. So I might move to the next question, please.
The next question is also from Stephen Mayne. PwC have been paid more than AUD 1 billion to audit Macquarie Group since it floated in 1996, and the job has still not ever gone to tender. Macquarie arranged for PwC to be our auditor when they floated our business as Macquarie Media in November 2005. 19 years and endless financial disasters later, we are still audited by PwC. How many times have we run full competitive tenders for the audit during PwC's unbroken run auditing our company, and when are we next planning to run a full tender for the audit job? Also, could the audit signing partner please comment on why our claimed net assets are 46% higher than the current market capitalization?
Right. Well, for the avoidance of doubt, yes, it is true that PwC for some time have been our audit partner. Sorry, our audit company. Our partner has been rotating every five years.
You heard at my opening comments that Trevor Johnson just signed off on the accounts for fiscal 2024, and Amanda has taken over as our audit partner for this financial year. Each year, through Carole's leadership of the Audit and Risk Committee, we review the proposal from PricewaterhouseCoopers with regards to their intent, their process, and their pricing. And each year, certainly in my time and Carole's time on the board, the fees have actually reduced for PricewaterhouseCoopers. So I believe that takes care of that particular part of the question. The second part of the question was, I think, NTA? Yes. And I'm not sure that's actually a question for the auditor because the auditor actually deals with the process of the governance. I think I've already made comment around the broadcasting radio CGU. Mr.
Mayne, if I can call you to page 65 of the annual report, the key assumptions are well laid out and the rationale on why the board went through a rigorous process to make the impairment that we did.
I have another question from Stephen Mayne. This is regarding you in particular, Heith. Could Heith please explain the process through which he became our Chair? Which of our major shareholders supported his appointment to this role? Also, corporate voting is not a secret ballot, and given the takeover battle with our largest shareholder, ARN Media, over the past year, could Heith please comment on whether he knows if ARN Media is supporting his re-election today? Have ARN voted in favour by proxy, not voted at all, or are they waiting to vote in the meeting today? Finally, are any of the major proxy advisors still covering us, and if so, have they all recommended in favor of his selection today?
Mr. Mayne, I made it quite clear in my opening comments that there were two proxy advisor reports from ISS and Glass Lewis, and those reports were in favor of all four resolutions from both proxy advisors. To your question of whether a particular shareholder has voted in favor or not, that's up for that shareholder. It's not for me to disclose, and we've already got the count table listed here in front. Oh, sorry, the other part of the question, I believe, was the process for electing me as the Chair. At the time, I made comment in my opening comments around Rob Murray, the previous Chair, had actually set in stone a very considered succession planning process.
That was a process that was well understood by all of my fellow directors, both past and present, and it was unanimous support that I would step up at the right time to take over as Chair, and it was deemed in March of this year that I would do so.
This is another question from Stephen Mayne. As Chair of our company, could Heith outline his approach to the tricky social issue of gambling advertising in a country like Australia, which suffers the world's biggest per capita gambling losses running at AUD 25 billion a year? The federal government continues to dither in terms of responding to the unanimous cross-party parliamentary committee recommendation 17 months ago to implement a full tobacco-style gambling advertising ban by 2026. What proportion of our advertising revenue comes from gambling companies?
How much has this risen over the years, and how active have we been in terms of lobbying the federal government not to introduce the proposed full ad ban? What guardrails do we voluntarily put in place in terms of gambling advertising, such as not broadcasting them during school drop-off times or children viewing hours, or limiting the volume of gambling ads during certain programs such as live sport?
So firstly, let me say that we are very aware as a board and a leadership team with regards to our social license to operate in all communities across Australia. That is the lifeblood of what our business survives on. And in so doing, when you think specifically about gambling, which is the heart of the question, we do have sponsorship from gambling companies, but they are specific to our sports programming within and associated with LiSTNR.
It's a particular vertical and segment for which we operate. With regards to actually the perception that we may be running advertisements for some companies that are not appropriate, we operate under very strict guidance from the industry body and the regulators with regards to what we can actually produce, when we can produce it and air it. That also goes to advertising. There is an appropriate complaints tribunal process that we review, not just as a management team, but as a board as well with regards to both customer complaints and also whether they be for content from our on-air talent or from our advertisers. So we believe we have a compliant and robust process, and our advertising dollars from gambling-associated companies is appropriately linked to our sports product.
I might just add that, as you say, attracts more gambling advertising than the Hit Network, but gambling advertising during live sport is actually banned before 8:30 P.M., and we adhere to that requirement.
Thank you.
Oh, a bit.
Yes. Well, lobbying, we don't directly, thank you. We don't directly lobby into Canberra effectively, but we do actually, we're very active with regards to our industry bodies, primarily the Commercial Radio Broadcasting Association. And also, I might add Free TV industry body. So those bodies are very active with regards to all aspects of reform, whether it's media reform, which we have a view on, or whether it's other reform or regulatory affairs that are coming through our federal government.
I have another question from Stephen Mayne. This one relates to the election of Marina Go. Could new director Marina Go and the chair comment on the recruitment process that led to her appointment to the board? Was a headhunter involved? Did the full board interview Marina, and did they interview any other candidates?
Yes, an external consultant was appointed. Yes, the full board interviewed her, and yes, I've already made those comments in my remarks.
The question goes on: Did Marina know any of our directors before engaging with the recruitment process? Also, could Marina please explain why she banned online participation at Friday's Adore Beauty AGM, where she is chair? Hybrid AGMs maximize shareholder participation and accountability, so thanks to Southern Cross for sticking with the practice in recent years.
For the avoidance of doubt, we're only interested in taking questions to do with Southern Cross Media today. I can say that Marina and I have recently, in the last year, we sit on the board as national directors of the Australian Institute of Company Directors as independent non-executive directors. So we have met each other through that particular board. But to the rest of Stephen's questions, I think it's pertinent. We'll just stick with Southern Cross Media, please. Yep.
We have—and I might just take a question from another shareholder at the moment.
Please.
This is from Stu B, shareholder. What changes to the regulations severely restricting SCA's ability to compete against larger competitors can you reasonably expect?
Yeah, no, it's a great question. I think the key word in your question is reasonably.
I think it's fair to say at the heart of it, the regulation as it stands today for the media marketplace and the landscape, and specifically the Two Voices Rule, is antiquated in our view and not appropriate for contemporary Australian choice. Now, the heart of your question is what would we expect the government to do? I think everyone knows on this call that we will be having a federal election sometime in the next six to nine months, and we believe it's highly unlikely that the current government will be enforcing any regulatory change in that period. We will continue to meet with the major parties and the minor parties with regards to our view, which I think is a fairly consistent view across my contemporaries as chairs of media companies.
I'm going to return to another question from Stephen Mayne. At 8:16 P.M. last night, the AFR published a story by media writer Sam Buckingham-Jones, which included the following line: "ARN Media is among the three biggest Southern Cross shareholders, all of whom intend to vote against the remuneration report according to multiple people briefed on the matter who spoke on condition of anonymity." What is going on with our major shareholders leaking their voting intention to the press ahead of the AGM? They are clearly trying to undermine us with public pressure and a remuneration strike. It would have been better to publish the proxy position to the ASX along with the formal addresses, as many companies now do so. We could have a more fully informed debate on the voting situation at today's AGM, but you've declined to do this.
What is the voting position, and please outline our pre-AGM engagement with these three largest shareholders who clearly have turned hostile?"
Well, as I mentioned in my speech, there were only two, actually, for the avoidance of doubt, two large shareholders that declined to support my re-election and the remuneration report, and I made that clear in my address. With regards to engagement with shareholders, as Chair, I independently meet with our management, with our top main shareholders, and that's effectively anyone that's 5% or above. That's in addition to management actually spending time at least twice a year, often and more frequently than that, with our main shareholders.
I now have some general questions from Stephen Mayne. Our largest shareholder and biggest competitor, ARN Media, have crashed and burned trying to bring Kyle and Jackie O into the Melbourne market to justify the ridiculous new long-term contract they secured from the company. Did we help drive up the cost of this contract by competing vigorously to poach Kyle and Jackie O, and how have our stations fared fending off their push into the Melbourne market?
Well, I think I would make the comment that we agree with the sentiment of our competitor, and it's not on me to make comment of their issues, and they have more than their fair share. With regards to Melbourne, there's a reason why we are the number one rating in Melbourne, and John, perhaps you made comment in your speech around Fox FM and the activity, but perhaps you'd like to elaborate?
Yeah, look, clearly we were all aware of the arrival of Kyle and Jackie O into Melbourne, and we prepared for it, as did our competitors, and we're delighted to be the family-friendly, leading 25-54 demographic property with our Fox lineup. It's very much family-friendly, but it's also advertiser-friendly, which is very important in this marketplace, so delighted the way Fox has performed this year, and also delighted the way in Melbourne has maintained its performance and actually outperforming KIIS Melbourne as well.
There's a question from Stephen Mayne. The five most valuable U.S. big tech stocks, Microsoft, Apple, Amazon, Alphabet, and Nvidia, are together worth more than $20 trillion, largely because they have enormous pricing power and are overcharging customers the world over. Putting aside the damage some of them have done to our business as competitors, could the CEO comment on which of the big global technology companies we are most reliant on from an operational point of view, and what would we do if they suddenly put their prices up by 30%?
I'm not sure exactly. We do get some funding from Google, if that's the question, but I'm not sure we have any reliance per se in relation to the major platforms, but I'm not quite sure I understand that.
Yeah, maybe, Mr. Mayne, we can take that offline, and management can answer that. I've made it quite clear that we saw them as competitors with regards to the regulatory environment, and I think he's had more than a fair share of questions, so happy to take those that are unanswered offline. But I know there were some more questions here, so I wanted to go. I think, sorry, I can't quite see it, David. Yeah. So David and Roger, and then I thought there was one over here as well.
Just one final one. I think given traditional media is very volatile in terms of profit performance and free cash flow, and for obvious reasons, but just appreciate either John or the board's clarification or views. If we look at free-to-air television, Seven Network is probably the most transparent because Nine is hard to assess, but roughly speaking, market cap AUD 250 million. It's got AUD 300 million debt if you strip out the print value. The value the market is placing on the Seven free-to-air network is around about AUD 420 million. It's got well over AUD 1 billion of revenue. It's just, be interested in your thoughts.
It's obviously not a scientific answer, but you're in a situation where your enterprise value is in the threes when you strip out a few things, but your profit margins seem to be quite different than free-to-air, and that's probably an issue that is radio going to move into that sort of lower profit margin level as free-to-air is, or do you think you can maintain your profit margins? At the moment, the enterprise value of radio is far higher per dollar of revenue than free-to-air. So I think that's potentially a warning sign, but maybe radio can maintain its margins, which are significantly higher generally than free-to-air. Just interested in your general thoughts. Thank you.
Yeah, well, maybe I'll take that first and then hand it to John. I think the sentiment is right. That's how we think about it. We do believe that audio and specifically broadcast radio has actually got a particular place that's useful in Australian society, and at the same time, long term, we believe that there will be margin appreciation for the sector at large, and we believe that we will be leading that, notwithstanding the fact that digital audio, as we've already heard today, is continuing to grow. On TV, on free-to-air TV, we do take the view that there is actually a role and a place for free-to-air TV in Australia, but strategically, it's not part of our product proposition. We are very focused on audio with regards to metro, regional, and digital capability, and that's where we're actually focusing our capital, our time, and our investment.
Yeah, just to add to that, I mean, the BVOD revenues, which is the growth engine of the free-to-air, are maintained by the network, so when he says our assets are better in other places, it's a place where the digital revenues are associated with that moving forward. In relation to audio, and I say audio advisedly, is that digital audio in particular doesn't have the competition that, say, the BVOD platforms have in relation to the other streamers, whether it be Netflix, etc. We don't. We have a key competitor in Spotify, which in the main is a non-advertising-based platform, and it's a premium subscription base. So our model is very different moving forward, and our model is hyper-local, and that's why I truly believe in the stability and sustainability of our margins moving forward.
And there's one at the front. Thank you.
I think the board could go away tonight and think carefully about your statement relating to you're very happy with the opening first quarter result. Obviously, there are some jaws opening up, like in the movie, and if you've got a revenue rise of 4.8%, and we don't know what the cost allocated is into the radio exit TV division, you've obviously stated, half stated already, there's been an excellent recovery in the first quarter. So I think overnight, you should maybe put a clarification out to the ASX on that and provide a more precise figure. Now, we get also to the second thing relating to the votes against the board, which are damaging to the company is their intention.
The company should make some sort of announcement relating to the fact that a competitor, in the spirit of the broadcasting, can't cross media ownership restrictions, is actually interfering in this company's operations. So the 15% vote by ARN should be put in that context. The board should make some sort of statement to that effect. The second major shareholder that voted failed in an offer of shit assets for your company, essentially traded one for atrocious assets in Gambier, Wollongong, and Newcastle turned to profit performance. So I think you should make a statement in respect that these companies are coming from that point of view. One end effectively is a breach of the broadcasting principles, right? And the second is what they call a half-arsed potential operator.
The third, I keep repeating back to the fact that you've given a half-baked guidance already. You might as well bake it out completely. In respect to the options situation for the board, and I note that for all shareholders, that put options would have been much more successful for executives in the media industry than call options for the last decade or so. And so I therefore would go let yourselves be excused from buying more shares or taking these things. The last thing to be said, and this is probably most important, we've got Kyle, age 52, 16 years ahead of the median age group in Sydney in the greater metropolitan area. He's got to age out and probably end up at 2SM in due course.
Now, so I figure John's got to provide us with some color, flavor, or what he intends to do on a 4% rating, which is worse than a meat pie.
Thank you for your comments. I don't think there was a question here, but there were some comments and guidance for us to take away, which we'll take on notice. Thank you. Are there any other questions in the room? Can't quite see at the back, so you need to wave your hand if not. And are there any other questions outside of Mr. Mayne online?
No.
All right. Well, maybe if there's one more question from Mr. Mayne, we could take it.
And we can respond to the rest after the meeting.
Yeah. So last question then from Stephen Mayne. We broadcast News Corp Sky News across much of our regional television network. Given that we are trying to sell our regional television assets and News Corp is simultaneously trying to sell Foxtel, are we talking to some of the same potential buyers? What is the current status of our Sky News contract? When does it expire, and has it been profitable for our business?
Well, firstly, we're obviously talking to a number of parties with regards to the sale of our TV assets. I'm not going to get into detail on who those parties are or whether they may or may not have interest in the News Corp assets that have been divested as well at the same time. And then the second, sorry, the second part of that question was? When does the Sky News contract expire, and has it been profitable for SCA? Well, it certainly has been profitable for SCA.
I think we disclose that in the annual report, and equally, and perhaps more importantly, all of our supply arrangements are commercial and confidential, so we're not going to be talking about tenure in that regard. So I'm just going to go to the room for any last questions. If not, I'm going to suggest that we don't have any questions, and that concludes our discussion on the items of business and all matters we need to cover in our meeting today. As explained earlier in the meeting, all resolutions will be decided by poll, and I appoint Chris Dedrick of Computershare to conduct the polls. I've previously explained the arrangements for online voting today. For people physically present here today, the poll will be conducted as follows. Each shareholder, proxy holder, or corporate representative will be invited to complete their yellow voting card.
Your yellow voting card contains all the resolutions contained in the notice of meeting. Please follow the instructions on the yellow voting card and tick the voting box for each resolution or write the number or percentage of votes you are casting for or against the resolution. When you've completed your voting card, please return it to Chris or one of his team. After a reasonable time, I will declare the polls closed and will then formally close the meeting. You will all be notified of the results of the polls on the company's website and by ASX announcement later today. If there is anybody here who believes they have not received the correct card, please raise your hand so that a representative of Computershare can assist you. I now invite you all to complete your yellow voting cards.
If you are participating in the meeting online, please ensure that you have cast your vote on all resolutions that you're entitled to vote on. I will shortly declare the polls closed. I now declare the polls closed. The final poll results will be released to the ASX and posted on the company's website when they are available later this afternoon. On behalf of the board, I thank you for participating in today's AGM. I declare the meeting closed, and for those of you in the room, I invite you to join the fellow directors for some light refreshments. Thank you.