Transformation twister

SCA’s departing CEO Grant Blackley is heading to Europe for a three-month break and a base in Barcelona where he has bought a home – one of them. Sydney and Port Macquarie are the others. Another executive media gig abroad is Blackley’s preference over board and advisory roles and he maintains SCA’s current CEO transition is one of the “more orderly” succession plans for a media company in recent years.

Blackley insists his intent with the SCA board to leave at the “halfway mark” of a six-year digital transformation program has been in play for some time and that SCA’s Chief Operating Officer John Kelly was the right person to finish and deliver the challenging roadmap as CEO that will see SCA complete its digital overhaul in 2026. 

At least 80 different apps have been sunsetted, 300 studios and 60 offices “fully connected”, countless systems and processes replaced and people retrained. All that had to be deployed to enable SCA’s bet to build the Listnr platform “under the cloak of secrecy”. 

Listnr now houses 100 streaming radio stations, 200 weekly podcasts, audio streaming rights for the AFL, NRL and Cricket Australia and allows the consumption behaviour of north of 1.3 million logged in users to be captured – and other listening recommendations and advertiser messages personalised and targeted via AI. 

Underlying tension

None of that was possible, Blackley and Kelly told Mi3, without the often arduous overhaul of the analogue company’s infrastructure and systems which started three years ago. The combination of Covid  – radio and audio revenues are still to recover to pre-pandemic levels – and investors unhappy with the hit on profits to fund a “future-proofed” digital-first SCA has resulted in “underlying tension” with equity markets. 

“There was always a risk from the market's perspective that we might not successfully deploy and I think that's what's dragged on our share price to a degree,” per Blackley. 

“But we wanted to future-proof the business with a long-term strategy – that means long-term investors can benefit. So it’s true there has been underlying tension. Covid has not been kind to any media company. That's the first thing. The second point is that while TV markets responded well initially, there has been a bit of a drag from the audio markets. That’s not been led by national advertisers, it’s actually led by the SME players. They are still coming back.”

The “tension” Blackley speaks of is the same for many legacy companies preparing for sector disruption – investors penalise short-term hits to profitability from established players but cut a huge runway on profitability for start-ups promising growth. “If we'd done nothing at all, we'd be criticised by the market,” said Blackley. 

Analysts turn on Listnr

Some analysts are turning, however. JP Morgan equity analyst Andrew McLeod wrote in an investor note to clients in February: “We were sceptical when Listnr was launched in the highly competitive audio streaming market. But 2.5 years later it is the #1 podcast sales house in Australia. There is a lot to like: a fast growing user base, rising time on site, good user data (streaming and download stats) and ad revenue that should reach $28m this year…” McLeod put a current enterprise value on Listnr as a standalone business between $37m and $110m.

Indeed, new CEO John Kelly says top of his agenda is completing the “final horizon” in the next three years of SCA’s digital overhaul and getting Listnr to break even.

“We're well aware that we haven't performed well at a share price level in recent times and Grant’s gone through the reasons,” Kelly told Mi3. “But we think we've got a really good opportunity to improve our core earnings. I'm particularly talking about radio there, but you'll see us talk more about Listnr in relation to profitability as part of our full year results. In the past we've said that we’ll break even in FY 25. You can probably read between the lines in terms of our focus – how do we actually improve that position? Well over 50 per cent of the market is going to us at the moment in terms of digital audio [revenues]. That's clearly coming off people like Spotify. So even in a relatively depressed market, we're performing well.”

The current quarter for the ad market has softened, Kelly said. What’s next is completing the plan.

On the precipice

“I guess my reputation in market is being an operator that delivers. So my mantra is all about operational excellence and really trying now to deliver on the promise of Listnr,” said Kelly. “Also, we shouldn't forget Triple M and Hit’s performance. Our ratings have improved. Has that been realised in terms of revenue share? Perhaps not. That's something that we really need to drive across the business and with our sales teams to best monetise our improved ratings performance. I’m pretty excited and energised because we think we're really on that precipice with all the great work Grant’s done in leading us to this point for the next three years.”

So what of the rumblings of the company rebranding from SCA to Listnr?

“It is the heart of the business, fundamentally it could be the name of the business, but it's not going to be whilst we're in a phase of not having I guess the scale and the earnings contribution from the asset,” per Blackley. “But the moment you see that it becomes a different conversation that can be considered by John and the board at that point in time.”

And what about Blackley’s future? Where and what? 

Hola Barcelona 

“Yes, I did buy a place in Barcelona 18 months ago,” Blackley admits in response to his plans for Spain. “I've seen it but not lived in it. I've already booked a three month holiday, commencing the middle of August to travel around Europe and the US. My family will join me at certain points of that, my wife will be with me the whole time. And to be honest, after 38 years of working in media in Australia, I would like to ideally explore the possibility of living and working outside of Australia. So that's really where my primary focus is.”

Does that mean he's staying in the media business?

“I think that's where my experience and tenure has been and I'm probably most able within that media and entertainment world,” he said. “I'd like to think that I could lend those skills somewhere to another company outside of Australia. I don't see my next role as a non-executive director or board role or portfolio of boards. I'd much prefer to have a healthy break followed by an executive role – but I want that role not to be in Australia.”

Which means Kelly will have SCA all to himself. Now he’s got to convince the advertising and equity markets to listen.