UPDATE: Southern Cross Austereo (SCA) CEO John Kelly has ignited speculation regarding a potential acquisition by Nine Entertainment Co. (NEC), confirming that discussions have taken place within the company. This revelation comes as NEC may be poised to make a significant offer following its recent $3 billion windfall from the sale of its Domain divestment.
In a recent interview, Kelly was asked about SCA’s sale status. He responded cautiously, stating, “We have been saying for some time now that we believe in media consolidation. If it was of the right offer for our shareholders and it made sense, then we’d consider it.” The implications of this statement have sent ripples through the media landscape, amplifying interest in a possible merger.
If NEC pursues SCA, it faces a critical hurdle: compliance with the Broadcasting Services Act. This law restricts any entity from controlling more than two commercial radio licenses within a single market. Currently, SCA operates 99 stations nationwide, while NEC manages five talk-based AM licenses, including 2GB in Sydney and 3AW in Melbourne. To consolidate operations, NEC would need to divest its own licenses, creating immediate challenges in major cities.
The timing of this potential acquisition is particularly significant. Over the last few years, SCA has undergone a transformation aimed at becoming a digital-focused audio powerhouse. Kelly noted, “We’ve done that now,” underscoring a shift towards a more diverse and robust business model. SCA’s recent financial results reflect this transformation, with total revenue for the year ending 30 June 2025 hitting $421.9 million, a 5% increase year-on-year. EBITDA surged by 34% to $71.1 million, and net profit after tax skyrocketed to $15.1 million, up from just $4.5 million the prior year.
A standout achievement was the performance of SCA’s digital segment, which generated $45.1 million in revenue, driven largely by the growth of its audio platform, LiSTNR. This platform turned a profit with $2 million EBITDA, a significant turnaround from a previous $10.9 million loss. Additionally, SCA reduced its net debt to $67.6 million and rewarded shareholders with a full-year dividend of 4 cents, compared to just 1 cent the year before.
Looking ahead, SCA expects revenue to rise to between $435 million and $440 million in FY26, along with EBITDA forecasts between $78 million and $83 million. Kelly expressed confidence, stating, “We’re feeling pretty confident about where we are as a company,” highlighting ongoing investments in live and local content that have bolstered SCA’s competitive edge.
As this situation develops, industry watchers will be keenly monitoring SCA’s next moves and any formal offer from NEC. The potential consolidation could reshape the media landscape in Australia, impacting stakeholders from shareholders to listeners.
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