Making SCA Great Again
CEO Grant Balckley tells Peter Saxon how it's going
By any measure, it was a great half year result 2016 - 2017.
Costs were up but revenue and profit was up even more, mostly on the back of SCA’s television assets after ditching it’s TEN content deal and swapping it for NINE’s. The move has been an instant success and when combined with the more modest but solid rise in radio the result is an 11.8% rise in profit (NPAT). For a more detailed set of figures, read our earlier story.
Of course, they could have had more. Only three weeks ago, SCA entered into discussions with Bruce Gordon’s WIN Corp which could have seen the former end up with Illawarra station i98 - which is the most conspicuously absent pearl in SCA’s east coast network. But just days before these half year results were announced, SCA pulled out of the talks
“Disappointingly we had to pull out of that because the parties couldn't agree in the end on a range of matters and the detail,” says Mr Blackley, “But it’s fair to say that we felt that it was a very sound proposition, strategically, that we would divest ourselves of Northern NSW (television) to complete the WIN Network and the national footprint that they don’t have today. And secondly the acquisition of i98 and allowing that single asset within that family of assets in WIN would actually bring more value to the market place and more value consequently to SCA.”
Another disappointment was having to change the 2Day FM breakfast show for the fourth time in as many years - although only the first time on Mr Blackley’s watch. It’s was always going to be a tough call to change up a show like Rove & Sam that had so much invested in and riding on it.
“If something doesn’t deliver to the targets one sets, one should change and that’s appropriately what we did.” says Mr Blackley. “Yes it was tough. But we know it was the right thing to do. We do believe that the product that we are now investing in with Em and Harley has some good bones and we will look to improve the performance.
“The economic value that comes from improving Sydney on (our) HIT (network) is a focus for us and (the show) is getting appropriate time support and capital.”
While it’s true that the other nine of ten SCA stations in metro markets perform well enough to collectively post a 3.5% gain in revenue, 2Day FM is considered by many as the company’s flagship and is crucial to the SCA brand image. However, Mr Blackley puts that sentiment into perspective, saying, “I think it is important but it is not critical. We are a very big company. We operate in over a 100 markets in Australia. Sydney on Hit is important and our ambition is to improve it and move the needle in a positive light but it’s not going to transform the company.
“The optics from the market is that a lot of commentators reside in Sydney and therefore it probably gets undue attention some of the time.”
SCA’s Regional Radio markets also showed solid, steady growth with a 2.8% uptick in revenue and while that was dwarfed by TV’s 24.7% gain, it was impossible to work out what expenses were attributed to television and how much for radio as they were lumped together.
Mr Blackley explains, “We tend not to break it out principally because it is a co-location co-selling capacity. We are co-selling our assets which now include a great digital component as well. So you’ve got digital, you’ve got radio and you’ve got television. So we look at it differently than most of the market would like. We don't apologise for that but you’ll see is we continue to perform very well in those markets and we seem to be very efficient within the radio market we drove 83.9 million dollars in radio revenues for the year in regionals we drove $142.7 million of revenue so they’re very large sums of revenue and on an annualised basis, of course, it’s very strong.
“As long as we've got localism at the heart of our decision making and processing content I think we will continue to embrace and bind local communities together. I think we will get the best of local markets which is attractive to local business but is actually more attractive to national advertisers,” he says.
When Grant Blackley took over the reins at SCA in June 2015 it was fair to say the company was at a very low point having endured a tumultuous few years that included a number of on-air scandals costing millions in lost revenue while causing run-ins with the Australian Communications and Media Authority (ACMA). Problems were compounded by a heavy debt burden and a television network that was underperforming. In similar circumstances many incoming CEO’s might be tempted to make severe cuts in staff and other operational expenses. But that’s not how Mr Blackley went about it.
“In the absence of investment its often hard to move forward. so we try and do it as efficiently as possible.
“At the same time, we didn't have to rebrand the stations but we thought it was good for our national footprint - our national reach. We didn't have to measure 24 new markets (with surveys). But it was essential, if we were to garner greater support and improve our national revenues. There are a whole range of things that we didn't have to do which we’ve elected to do.
“I think we have to keep our brand really healthy. We have to keep it alive and we have to create superior content for the market and we don't want to be in the middle. We want to be in the premium sector of delivering national content alongside local content in a very strong brand and that we monetise it with the largest sales force in Australian media exceptionally well and better than the prior period. And that involves investment. So we call that out and we do that on a very willing basis,” says Grant Blackely.