What you need to know: 

• Consolidation is on the cards for ARN owner Here, There & Everywhere, with CEO Ciaran Davis scanning the market for ways to go multi-platform.
• Out-of-home is a key target. Digital OOH and digital radio have “great synergy”, reckons Davis.
• Junkee Media is not off the table: “We’d look at anything, to be honest.”
• Targeted advertising to digital audio listeners will bring in $10-15m this year – small, but double last year.
• HT&E releases its FY2021 HY results on Thursday.

Here, There & Everywhere else?

Media owners must consolidate and build larger, multi-platform, addressable audiences that compete with Google and Facebook, ARN’s CEO Ciaran Davis says, openly admitting the cashed up digital audio business is eyeing acquisitions.

Junkee Media is on the table – but out-of-home is looking more appealing, he told Mi3.

“If you look at if you look at out-of-home and radio, I think they're the two that actually will benefit in the longer term as mediums because I think they're very relevant and will stay relevant from a listener and a consumer perspective,” Davis says.

“The more digital audio we're producing and creating, combined with the more digital screens we're creating, I believe there's great synergy between the two of those – if you overlay them with a very good data proposition. The sectors themselves have positives outlooks going forward. And the potential of closer alignment is something that we think... will work together.

He said some in industry "don't believe that theory, but we do". As oOh!Media aims to offload Junkee Media, Davies said "we would look at it, we'd look at anything to be honest”.

Cash buyer

In May, Here, There & Everywhere, the parent company of ARN – of which Davis is also CEO, sold its stake in mobile messaging software company Soprano Design to a Scandinavian buyer, ending up with an estimated $250 million in cash and shares. While HT&E has scale in audio – the iHeartRadio app has about two million registered users and broadcasts to 5.5m Australians per week – it lacks multi-platform size of one of its radio rivals, Nine.

“I think if you look at the theses of consolidation, it's really with a view to what CMOs and brands and agencies want from media owners in the next number of years. They want scale, they want multi-platform content delivery, they want ease of trading, and they want an addressable ID and data,” Davis said.

“Media organisations, we're all on a push to try and get all four of those, but that's not possible sometimes when you're focused on one particular sector. I think, to be fair, what Nine has done is demonstrate that when you can offer scale, multi-platform, addressable data and make it easier to trade, then that’s how you can compete with YouTube, Google and Facebook, which is really important for the advertising sector in Australia. That's the thesis... whatever opportunities we have where we can integrate and expand that audience further, we will definitely look at."

Bargain hunting

HT&E bought a five per cent stake in oOh!Media for $15m in early 2020. As some businesses are struggling with lockdowns, distressed assets present potential opportunities, Davis said. 

“There are a lot of businesses out there that have balance sheets that are not the healthiest. We're lucky that we have a very strong balance sheet and cash on hand.

“We continue to look at the right opportunities at the right time, because as a board, as a business, we do believe we've got to have scale and multi-platform, more addressable IDs and be easier to trade with.”

HT&E will release its 2021 financial year half yearly results this week. The most recent lockdowns have not hit ad revenues as hard as last year, while audiences remain strong. 

"We’re not seeing the level of cancelations that we saw this time last year. Yes, there’s been some slowing down of bookings as people wait to see when we come out of lockdown, and the stop-start nature of lockdowns doesn’t help confidence, but this is certainly not what we saw this time last year," said Davis. 

Targeting improvements

ARN rebranded earlier this month from Australian Radio Network to simply the acronym, reflecting its intended shift towards digital audio over radio – although radio remains its bread and butter, for now.

"About 61 per cent of listening to iHeart is still listening to radio output. Catch up radio is increasingly very popular," said Davis. 

There are more targeted ads entering the market, with Adobe integration, audience segmentation is getting more effective, he suggested. SMEs are returning to radio after trialling Facebook and Google and finding them to be less effective than radio, he added.

"[Digital audio] is not huge revenue for us at the moment, it’s a learning curve. We’re turning a traditional radio broadcast business into a digital audio business, that’s quite exciting to me," he says. 

"We’ll do something between $10m and $15m on digital audio revenue this year. So it’s sizeable, that’s double last year, but that’s off a small base."

But an OOH deal could bring far more substantial gains, and Davis thinks it remains a buyer's market.