ARN Media Limited (A1N) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the HT&E 2022 Full Year Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ciaran Davis, CEO and Managing Director. Please go ahead.

Good morning, everyone, and thanks for joining the call today. I'm joined by our CFO, Andrew Nye. And today's agenda will focus on our financial highlights, the operational performance in what was a big transformational year, group financials and I will then spend a bit of time highlighting our All Audio strategy before concluding with the outlook and questions. I'm pleased to report another year of strong performance delivered against the backdrop of global and inflationary concerns but highlighted the resilient nature of radio's relevance in Australian media and the benefits we experienced having acquired 46 regional stations at the start of the year. Revenue post acquisition was $345 million with EBITDA of 53% to $92 million and EBIT $71.6 million. NPAT grew over 57% to $45 million, with EPS rising to $0.146 per share. As you know, we are a strong cash-generating business with free cash flow of $55 million, and the company has declared a fully franked dividend of $0.052 per share. Leverage at 0.8x is very sustainable. But the sale of our stake in Soprano for $66 million cash will result in minimal net debt for the company and puts us in an enviable position in Australian media. The Board is committed to maintaining strong dividends. And on top of the dividend announced, the dividend policy is also increasing to a 65% to 85% payout ratio with a commitment to pay at the higher end if net debt is under 0.5x. A noncash impairment charge of $250 million was taken in the year, reflecting uncertainty associated with the current macroeconomic environment. This impairment is attributable to the intangible assets of the full ARN business. It's been a very busy year, easy to get distracted with the integration work we did. But again, I am pleased we have made considerable progress delivering on our strategy to be the leading All Audio business in Australia. Radio is at our core, and we had another very good year, delivering record listenership where we now broadcast to over 8 million nationally, nearly 1/3 of Australia. We produced another #1 Metro share, highlighting the importance of our content strategy we have in place for all of our stations. I'm particularly pleased that while we restructured our commercial team post acquisition, we maintained a very strong revenue performance, and are well on our way to creating a commercial team that are experts in their field, selling All Audio solutions that combine Metro, Regional and Digital. And we kept a disciplined focus on costs, which can easily run away when integrating 2 businesses and maintained our strong radio margin of 33%. Our Regional acquisition is tracking ahead of expectations and, in our view, is already proving to be a very good acquisition. Our focus on delivering the right content for our audiences in regional communities have seen us take #1 position in key markets. We delivered $7 million revenue synergies of the $6 million to $8 million we guided to and with more growth forecast to come in 2023, and our Regional revenue growth of 7% was ahead of market. Digital audio is an emerging market, one where we see the potential to drive new audiences and revenues. We're the leading podcast publisher, reaching an average of over 5 million listeners per month and experienced a 40% increase in downloads. Our digital streaming numbers are growing at over 20% to 10 million a month as people listen to radio on different devices. Our low capital intensive model and a strong partnership with a global audio tech platform, sheltering us from ongoing heavy investment is seeing us accelerate our path to profitability to the end of '24. And we launched a new youth brand CADA in Q2 and are pleased with the audience built that now has a reach across all platforms to well over 3 million. On the Corporate side, we are close to exiting our long-held position in Soprano for $66 million, a terrific result for our minority position, and expect to have this completed in the coming weeks once FIRB approval is granted. We sold 4KQ for $12 million on a multiple of 12x EBIT. We completely exited Luxury Escapes, selling our final shareholding for $8.8 million cash. And in Hong Kong, Cody returned to cash flow profitability after a number of very challenging years. Andrew?

Thanks, Ciaran, and good morning, everyone. We have maintained a similar format for our financial results with the reconciliations to assist in the understanding of significant items and lease accounting included. The results include a full year of earnings for ARN Regional and, where relevant, pro forma comparative financial information has been provided. Here, we show the statutory reported results for the year. Group revenues were up $120 million or 5% on a pro forma basis, with continued momentum across our regional network, up 7% on strong comparatives. Total costs increased by over $91 million or 9% on a pro forma basis, reflecting our first year investment in new youth platform CADA. This investment impacted underlying group EBITDA back 4% on a pro forma basis. Underlying NPAT attributable to shareholders grew to $16.3 million, and earnings per share of $0.146 increased [ 41% ]. A significant noncash impairment charge of $250 million was recorded in December with a flow on impact to parent entity retained profits in 2022. The dividend of $0.052 per share has been paid out of parent entity profits for the period to 17 Feb '23. Here, we set out the pro forma results for ARN Group breaking out Metro, Regional and Digital advertising revenues and group earnings for the year. In line with how we manage the integrated ARN Group, we've presented a single earnings number combining Metro and Regional performance for 2022. This will be the basis of presentation going forward. 2022 was a year of challenging integration projects and change. With this backdrop, the Metro business performed incredibly well, up 3%, underpinned by market-leading eastern seaboard stations, delivering our largest-ever cumulative audience and best ratings results. Cycling strong comps, Regional advertising revenues grew 7% on a pro forma basis, with most stations in the network delivering year-on-year growth. With the Commercial team integration now largely behind us, the focus for 2023 is on driving national revenues and generating synergy benefits in addition to the 7 million delivered in 2022. Following a soft first half, digital audio revenue growth improved in the back half of the year, delivering full year revenues of $14.6 million, up 8% on a like basis. Total costs grew 9%, and EBITDA was 4% lower on a pro forma basis, impacted by our first year investment in CADA and broader inflationary pressures on people and operating costs. Whilst we manage ARN as an integrated network, on this slide, we have separately set out both radio and digital earnings to demonstrate the strength of our market-leading radio business. In what continues to be a challenging macroeconomic environment, we have maintained a relentless focus on costs and restricted radio cost growth to 5%, slightly ahead of previous guidance. Excluding the COVID-impacted 2020 results, we've maintained a consistent broadcast radio margin of 33% since 2019. As previously outlined, full year digital audio revenues of $14.6 million grew 8%, impacted by a slow start to '22. In July, we made a number of adjustments to our product offering and supporting ad tech that saw improved utilization of ARN owned inventory and conversion to revenue, delivering second half revenue growth of 28% versus first half performance. Total digital costs grew $9.5 million or 56% with the launch of CADA, including a heavier first year marketing investment accounting for $7 million of the growth. Having built our digital audio content, people and operating capability over the past 3 years, the core infrastructure is now in place, and we've reduced marketing investment for CADA now in its second year, we anticipate total digital costs to be back approximately 5% in 2023. Assuming a continuation of recent market conditions, we are targeting EBITDA and cash flow breakeven by the end of 2024. Looking briefly at our total investment in digital audio, it's important to note that we have not historically and are not forecasting to incur any material recurring CapEx to deliver this growth. The P&L on this page substantially represents our total ongoing investment in digital audio. Better market conditions and a strong management team delivered improved revenue and earnings for Cody Outdoor, up 9% and 31%, respectively, on a like contract basis. There is the potential for further improvement in 2023 as the Hong Kong economy opens up to international business and tourism after 3 COVID-impacted years. Following the completion of the Hong Kong Tramways contract in May '22, Cody is actively investigating tender opportunities for new contracts as they arise. Importantly, on current revenue level with cost base, the business is cash flow positive. Briefly on Soprano, we announced the sale of our interest for $66 million in early January. The deal is subject to FIRB approval, which is expected in early March '23. Operating cash flow increased 60% to $54.7 million, reflecting a full year contribution from ARN Regional and strong cash flow generation in the remaining business. Tax payments were unusually high in the year as we closed our historical tax matters. Looking to FY '23, we expect annual recurring CapEx to remain in the $8 million to $10 million range, encompassing a multiyear regional office refurbishment program, technology upgrades and [ BAU ] CapEx. The balance sheet details further deleveraging in the 6 months of December with manageable net debt of $61 million or 0.8x leverage before Soprano proceeds. Good tenure and access to undrawn limits remain on the group facility. The balance sheet reflects the final acquisition accounting for ARN Regional, a $250 million impairment booked in December, Soprano investment as a held-for-sale asset and lower tax liabilities after the settlement of remaining ATO matters. Today, we announced a fully franked dividend of $0.052 per share and an increase to the dividend policy to 65% to 85% of underlying NPAT. We expect to pay at the higher end of this range following the completion of the Soprano sale and subject to debt levels remaining under 0.5x leverage. Finally, we can also confirm the resumption of our on-market buyback today. Whilst the payment of frank dividends remained our preferred means of capital management, with our share price where it is, we continue to believe HT&E is undervalued. And at the current valuation, the buyback is accretive, and we believe in the best interest of shareholders. Ciaran?

Thanks, Andrew. Turning now to Slide 14. We're building an All Audio business to deliver the most comprehensive audio content for listeners and the most comprehensive audio solutions for advertisers. Our fully integrated strategy is a sustainable, low investment model with 6 key deliverables: one, to be the leading radio operator in Australia; to deliver the regional integration revenues we identified; three, to build profitable, incremental audiences in the emerging podcast and digital streaming markets; four, to make our content as widely available as possible for our audiences with a preference to increasingly drive those audiences to iHeart; to have the best media sales team in the country, selling radio, podcast and streaming solutions; and six, we're spending a lot of time building a constructive culture where people want to come and work. In terms of being the leading radio operator, 2022 was our most successful ratings year ever. And while strong ratings are not the only determinant of winning a revenue share, they are a key ingredient. We continue to invest in the best on- and off-air talent, and that investment is paying off with record high listeners approaching 6 million per week in Metro and 8 million nationally. We are, again, the #1 radio network 25-54 and 10+. KIIS 1065 is Sydney's #1 FM Station, #1 FM Breakfast and #1 FM Drive. Kyle & Jackie O continue to go from strength to strength, achieving their highest ever share and reach in '22. WSFM recorded its highest reach with Jonesy & Amanda, the #2 breakfast show in the city. Gold 104.3 is Melbourne's #1 FM Station, #1 FM Breakfast, #1 FM Drive with the station achieving its highest share since 2019 and its highest reach ever. Christian O'Connell is doing a terrific job and has been the #1 breakfast show in the market for 21 surveys. Momentum is building at KIIS 101.1 in Melbourne, and that's the fastest-growing station in the market, recorded its highest reach ever. The KIIS Drive Show, Will & Woody delivered 40% growth in audience. And the launch of CADA created a youth brand that helped grow overall radio listening to audiences at the younger end by 21%. We launched CADA in March with the vision to create a national multi-platform youth media brand targeting an [ underserved ] audience. Several new radio programs were launched with established content creators, including Flex & Froomes, with the aim to bring new younger audiences into radio. Gross reach has grown to over 3 million, and we are delighted to have worked with new marquee clients to ARN, including Bonds, Netflix and Collarts. What we have learned is that audio is a huge part of this audience daily media consumption, and that Commercial Radio continues to dominate listening, outpacing free music streaming by a factor of 3. Podcasting is also massive with the Flex & Froomes podcast reaching over 1 million downloads in 6 months, becoming ARN's fourth biggest catch-up podcast. The focus in '23 is to accelerate the migration of the CADA audience to more digital audio listing formats in DAB, streaming and podcasts. Our Commercial teams are now selling CADA as part of the All Audio offering. And this, coupled with the reduced need to invest in marketing to establish the brand, means that CADA will be net positive earnings contributor by the end of '24. Once we completed the acquisition of what we now call ARN Regional, we wasted no time getting to grips with the content strategy and unique positioning these stations play at the heart of regional Australia. It's magnificent to listen and see the passion and the pride everyone at ARN Regional has for their stations and their community. It offsets us apart from all other media in Australia, and we are committed to maintaining this uniqueness. We saw firsthand, the critical role we played during the floods in Queensland early in the year and just last week with [ bushfires ] in South Australia. We are the gateway for communities to connect to emergency services, sometimes their only connection and it saves lives. Our network is now made up of 58 stations, 46 DAB stations across 33 markets. And we also represent an additional 77 stations, delivering more than 8 million listeners to our clients. Just as in Metro markets, we invest in content, broadcasting 226 live and local shows across the network that delivered #1 ratings in key regional markets. We are excited about the iHeart rollout program we have underway and by the plans we have for our Local News First approach to be launched in '23. Our purchase is proving to be a very good acquisition with the integration ahead of schedule, delivering $7 million of national revenue synergies last year with local revenues up 7% ahead of market, a great result despite all the distractions of new ownership. We established a new regional management structure, which is working well. Our Commercial teams are now selling regional audiences as part of their All Audio solutions, and the feedback from the market on this has been great to hear, giving us the confidence to deliver the $20 million of revenue synergies within 3 years with $4 million to $5 million being targeted this year. The watch out is obviously the broader economy performance as the year progresses, but the year has started reasonably well. We're upgrading and digitizing our IT systems and processes which began last year and expect to have the majority of this completed by the end of the year. And there is some OpEx being set aside to continue the development of our people through investment in leadership, sales training, content creation and digital upskilling. Looking at the expanding nature of audio listening, radio continues to dominate. Connections between our talent and audiences and the content we broadcast are as relevant today as they ever were, perhaps more so. Without going into too much detail on this slide, the key takeout is that the radio ad market is returning to 2019 levels in the time frame we anticipated. Radio has commanded between 7% to 8% of total advertising every year for the past 15 to 20 years. So its role in media scheduling is well known and appreciated. The illustration in the middle of the slide shows that digital listening to radio is adding another 2 million listeners to radio as people listen on different devices. And the table on the right shows the expanding revenue market potential available for us to go after up to $1.4 billion on our estimates as opposed to the roughly $700 million Metro radio market we competed for not so long ago. Overall, we are seeing incremental audiences and revenue opportunities emerging in digital audio, and we are taking a cautious approach to understand them more. At the center of this approach is iHeart. We are very fortunate to partner with iHeartMedia in the U.S. to exclusively use the platform in Australia. This gives us access to global tech, freeing us to focus our investments on content creation and sales operations, rather than having to invest millions in recurring tech development upgrades or product releases. We're strategically building a digital audio arm to our business but making sure to fully integrate it into our total operations. Our digital audience has seen great growth in podcasting. We remain Australia's #1 podcast publisher and have seen growth of 40% in downloads to 290 million. We have 2.4 million registered users on iHeart with 10 million streaming listening hours per month. We've established partnerships with global content providers that gives us scale, structured in such a way as to drive as much profitability back to ARN. All of this means we are building a bank of tradable data of over 10 million unique monthly devices and nearly 200 million audio impressions, which can be targeted by location, audience or content. We're not talking massive revenue numbers yet, $14 million in '22, but the increasingly profitable growth of 28% in H2, we are optimistic of building a new profit center over time. Before we look at the trading update, I want to highlight briefly why we remain confident about our ability to continue creating shareholder value. Firstly, we are strong believers in the attractiveness and resilience of radio, particularly in uncertain economic times. It's cost effective, immediate, trusted. It has engaged audiences and delivers proven ROI. Our market-leading stations and brands underpins the stand-alone growth prospects we see over the short and medium term. Regional integration is tracking ahead of schedule, and we have increasing confidence to deliver the revenue synergy we identified. We have a low capital intensive model for emerging digital audio markets and can see a path to profitability shortly. Radio is a high cash-generating business, and we will have minimal net debt post the proceeds of the Soprano sale. The Board, as we said, has increased the dividend payout ratio to 65% to 85% and committing to pay at the higher end once net debt is less than 0.5x. And we remain open and proactive identifying and assessing value-accretive opportunities that are in the best interest of shareholders. Moving to the trading update. Q1 radio revenues are pacing near flat on same time last year, cycling strong regional comparatives and impacted by reduced government spend for the period. Consistent with historical radio planning, visibility into March and Q2 is short, however, current briefing level activities remain strong. At this stage of the year, we are forecasting total ARN people and operating cost growth of 4% as we invest in digitization and IT systems integration post acquisition. Short-term cost levers are available to limit growth should market conditions dictate. Annual CapEx is forecast to remain in the $8 million to $10 million range, allowing for a structured regional station refurbishment program over the next 3 to -- excuse me, 3 to 5 years. And in Hong Kong, as the economy continues to reopen an international business -- to international business and tourism, Q1 revenues for Cody Outdoor are forecasted to grow over 50% on same time last year. Thank you. I'll now hand it over for questions.

[Operator Instructions] Our first question comes from the line of Entcho Raykovski of Credit Suisse.

So my first question is around the trading update and the Q1 pacing that you've given us. Just interested in whether you're seeing any massively diverging trends between the Metro and Regional markets, I guess other than the tougher regional comps, which you mentioned. And [indiscernible] answer to that question, if you're able to comment on your Q1 pacing versus [indiscernible]. It looks like they have guided to a slightly higher number, albeit only slightly. Are you seeing any reason for the difference? Is it the exposure to different categories, for example?

Entcho, firstly, on the sort of difference between Metro and Regional, there isn't any material difference between the 2. It's relatively consistent across the board. And honestly, it's probably driven by the sort of slowdown in spending from government, which we believe is a timing thing. There's obviously a few activities perhaps planned for maybe middle of the year. So overall, there are categories that are actually growing. And I think our trading outlook in Q1 is impacted primarily by government and delayed spending. In terms of [indiscernible], I think obviously, we've got very strong comparatives to convert. That's probably dictating it, but also we're looking at the briefing activity that we have for March and for into Q2. Radio, as we know, has been short for a long time, and it remains as short. So I would think probably the 2 are reasonably comparative to be honest.

Okay. Great. And just secondly, you've spoken extensively about the digital opportunity. How do you think about the digital revenue trajectory needed to achieve the earnings targets over the next couple of years? I mean, just looking at the [ broad cost ] guidance, it implies growth of more than 30%. Are you comfortable you can deliver these sort of numbers?

I think, first of all, we've talked extensively about digital opportunity, but we're talking extensively in the context of it forming an important part of our overall All Audio offering. We're not differentiation really between Metro, Regional and Digital. It's -- from our perspective, it's combined. And we're building and training sales teams to be able to sell all forms of audio that we produce and content we broadcast. The earnings profile is obviously -- we're not talking massive numbers either compared to the radio business, which is why Andy broke out what the radio revenue was versus digital, and it's $300-odd million versus $14 million. And in terms of the overall growth, yes, we're probably looking in that sort of 25% to 30% growth required for this year to hit that level of profitability path that we see to end of '24. But I'll go back to the fact that digital audio is a part of our overall audio offering. And we're making cautious but informed investments where we see the opportunity to make profitable returns.

Okay. Great. And final one for me. Also relative to the digital side, have you seen an improvement in the conversion of [indiscernible] to revenues in the second half? I know that hasn't been an issue earlier in the year. And you obviously had the [ view ]. I don't know if you're able to provide any more color around that conversion metric.

Yes, I can take that. Entcho, yes, we have. So we did make some changes midyear. Looked at the product, prioritized first probably the inventory we own as opposed to third-party inventory through our sales process. The revenue performance that we saw in the second half. So the 28% growth versus the first half really reflects those changes made. So we will -- we won't talk in the future about billings. It is a confusing metric. So we will talk revenue. And we're very comfortable with the shift from -- or the growth from H1 to H2.

[Operator Instructions] Our next question comes from the line of Darren Leung of Macquarie.

I just have 3 quick ones, please, and I might just ask them all together. Just the first one on that impairment. Does it relate purely to ARN Regional? Or does it relate to ARN Metro as well? And then just as part of that, in the accounts, there's that 2.8% EBITDA CAGR. So can I just understand a bit about how the sort of assumptions around radio and digital take-up to sort of achieve that CAGR, please?

So first question on the impairment. So it's a whole-of-business impairment test that we do under accounting standards where we're one cash-generating unit. So the cash flows and the assets that cover the whole of business. So the write-down, yes, there was impact to the goodwill that was attributable to the acquisition of ARN Regional, but there were also other elements of the existing ARN Metro licenses that were also impacted by the impairment.

And Darren, would you mind just repeating the second half of the question? Sorry, we just missed that a bit.

Just the assumptions around the 2.8% CAGR, please?

There's a fair bit in that. The note you put you're talking to is within our annual report. Obviously, we're looking at 5 years of cash flows. We used our Board-approved budget for the starting point. We have assumptions around market share. So there is an assumption that we will gain certain market share across that period of time. There are then assumptions around cost growth -- heavier cost growth into the first couple of years, given the inflationary environment moderating back to sort of more normal trends in the longer term. There is a bit -- fair bit in that number. So probably unable to give too much more information in this format.

Understand. Second one is just to confirm, are we still receiving a dividend for the 6 months to June '23? I'm just noticing some of the wording around the second half dividend in '22.

So the wording around the second half dividend in '22 was actually attributable to the impairment and the impact on the parent entity. The intent at this point, market conditions continuing, is that we would pay a dividend in June as well.

Got it. And just a final one. There's obviously been a lot of press around some of your key talent. So maybe just a review as to when the major talent -- sorry, the major talent expiries happen and how we're thinking about managing that [ lease ], please?

There's a time frame. We don't give out the time frame, but there's nothing on the horizon in terms of talent changes. And we remain very pleased with the stations and talent that we have across the board, across all of our stations, Metro and Regional. So there's no impact or changes due in 2023, and we don't talk about the time frame beyond that. And I think it's also worth pointing out, which I say is that the investment we're making in talent is delivering very strong ratings results and is actually keeping radio as relevant as it ever was in the [indiscernible] of planners, buyers and brand [ marketers ].

[Operator Instructions] Our next question comes from the line of Cameron Halkett of Wilsons Advisory.

Just quickly on digital audio. You gave some good color there around sort of the growth of the cost profile you expect. Can you just give a bit of color for us as well, how we should think about the slowdown in spend in terms of first half, second half, just scaling that business?

So in spends in 2022, Cam, we saw an acceleration of growth from first half to second half.

Yes, that's right. In terms of FY '23, I think you mentioned before that you're expecting spend to come back a bit, unless you go down that profitability path. So more concerns first half, second half split of FY '23 is what I'm asking?

We're looking at that growth for the full year have -- sort of 25% to 30%. So haven't gone first half, second half splits.

And I think if you look at the -- particularly the marketing spend in CADA, Cameron, it was sort of fairly easily [ split ] between sort of the -- it was a heavier spend in Q2 of '22 and then the back half. But if you look at half-on-half, it was pretty even. We're obviously pulling that back as well. So I think it's spread pretty easily throughout the year.

Yes. Okay. And then final one, just on Cody Outdoor. We've seen Hong Kong reopen. And over time, it's probably safe to assume that the flow of people outdoor and [indiscernible] tourists will also ramp. So would that recovery likely to take place [indiscernible] that should continue to pick up and sort of cash flow positive to the group? Just wondering your thoughts around retaining that business in this environment, particularly [indiscernible] some of your peers or competitors in that market will probably want to lean into the recovery as quickly as possible. And just interested in your thoughts around retaining that business getting specifically [indiscernible] what is the all-in audio strategy?

Yes. I think to be fair, this is the first result in a number of years that we've been able to say it's cash flow positive and continuing to be -- forecast to be for the year. The team up there has done a terrific job in really difficult circumstances for the last 2 or 3 years to keep the business running, to retain sort of key contracts that they have, to sort of walk away from other contracts that were not so profitable. And this particular time of the year in early '23 is the first time that we're looking at the business that will be cash flow positive, and that gives us optionality to look at the broader context of what we do. But stand-alone as of itself at the moment, it will be cash flow positive if the market conditions continue. So from that perspective, we're pleased, but it gives us optionality that we will look at, which we haven't been able to do for 3 years.

Our next question comes from the line of Conor O’Prey of Canaccord.

I'm going to break a world record and ask a second question about Cody. That [ obviously eye-catching ] catching revenue goes plus 50%. I guess a couple of things. Number one, are there any comps later in the year that would say that's hard to [ surmount ] through the rest of the year? And then secondly, does the economics of that business enjoy the similar sort of strong operating leverage that Out-of-Home businesses have, i.e., high levels of fixed costs that then drop through to EBITDA and cash flow at a higher rate?

I can take that. So in terms of comps, one thing to consider on that 50%, that is -- we've seen strong growth on a like-for-like contract basis. So that 50% excludes the Hong Kong Tramways contract, which ended in April 2022. If you back that out, growth year-on-year -- actual growth in terms of real dollars is pretty comparable year-on-year revenue wise. In terms of flow through to earnings, it has -- the contracts have more revenue share and less minimum guarantees. So the [ cut through ] to earnings isn't like what you might see in some local outdoor businesses.

[Operator Instructions] Our next question comes from the line of [ Thomas Chapman ] of Jefferies.

Just one quick one for me. Just on the impairment charge that you have, this $249 million. I was wondering if there's a fundamental change in the ARN business looking forward? Or if you can give a bit more color around the specific factors driving that calculation?

So there's no fundamental change in the ARN business going forward. This is obviously a 5-year cash flow model. And it is -- we need to look at both the internal factors of the business, but also the external factors. And we've now had a share price [ 40% lower ] than what it was at the start of '22. So as a business, when we're considering the impairment, we look at both internal and external to [indiscernible] conclusion. And that's how we arrived at the $250 million impairment. But in terms of our view on the radio market, no, it hasn't changed since [indiscernible].

And Tom, I'll add to that, that the impairment is obviously associated with the current macroeconomic environment. Hopefully, you've seen in this presentation, the absolute belief we have in radio as a medium from an audience generation and a revenue generation perspective. This is relevant today as it ever was. And in fact, in uncertain economic times, radio actually tends to come into its own and perform relatively well to other media. It's short, it's immediate, it's very cost effective. And brands know and trust it very, very well. So from our perspective, we're incredibly buoyed by the fact that radio is [indiscernible] relevant and resilient as ever. And we're also then optimistic around the investments we're making in digital audio, cautious as they may be, but we're definitely seeing incremental audiences coming through. We're definitely seeing incremental revenue coming through. And we're definitely seeing a path to profitability shortening. So from the perspective of the mechanics of our business, we're looking at it, and we're quite confident where we're going.

Thank you. At this time, I would now like to turn it back to Ciaran Davis for closing remarks.

Well, thanks, everybody, for your time. Look forward to catching up with most of you on one-on-ones. Have a good day. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.