Southern Cross Media Group Limited (SXL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Annual General Meeting of Southern Cross Media Group Limited. My name is Rob Murray, the Chairman of SCA. I've been informed that a quorum is present, and I'm pleased to officially declare the meeting open. Thank you for joining us today. Today's meeting is being held using an online platform provided by Lumi. This allows shareholders, proxies and guests to attend the meeting remotely. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit votes in real time. And if, despite all this, we have technological issues, we'll be making a recording of the meeting available on our website in the coming days. Before moving to some housekeeping matters, I'd like to welcome and introduce my fellow directors who are joining the meeting today: Grant Blackley, our Managing Director. I will ask Grant later in the meeting to provide an update on the company's current trading performance and outlook. Glen Boreham, who joined the Board in 2014 and will offer himself for reelection later in the meeting. Glen is Chair of our newly formed Digital Transformation Committee. Carole Campbell, who was elected by shareholders at last year's AGM. Carole has recently taken over as Chair of our Audit and Risk Committee. Ido Leffler, who was also elected by shareholders at last year's AGM. Ido has been an active contributor on our Board, including as a member of the People and Culture Committee and the Digital Transformation Committee. Heith MacKay-Cruise also joined our Board at last year's AGM. We've benefited from Heith's contributions as a member of our Audit and Risk Committee and Digital Transformation Committee. Helen Nash is Chair of our People and Culture Committee and also a member of our Audit and Risk Committee. Along with me, Helen was reelected by shareholders at last year's AGM. Melanie Willis joined the Board in 2016 and like Glen, will offer herself for reelection at today's meeting. Melanie recently stepped down as Chair of our Audit and Risk Committee, but she remains a member of that committee and the People and Culture Committee. We're also joined today by several members of the company's executive team, including Nick McKechnie, our Chief Financial Officer; and Tony Hudson, our Company Secretary. I'd also like to welcome Trevor Johnston from the company's auditor, PricewaterhouseCoopers. Trevor will be available to answer any questions in relation to the audit. Finally, Chris Dedrick from Computershare is also with us today. Chris will act as the returning officer for the purposes of conducting and determining the results of the poll on today's resolutions. Before we move to the formal agenda of the meeting, let me outline the processes for shareholders to ask questions and vote during today's meeting. Shareholders can submit questions at any time during today's meeting. [Operator Instructions] If you have any issues issuing -- using this system, please return to the Lumi platform. Either I or one of my Board colleagues will address your questions towards the end of the meeting. Where appropriate, I will ask Trevor Johnston from PricewaterhouseCoopers to respond to any questions received about the conduct of the audit. Your questions may be moderated. And if we receive several questions on one topic, we may amalgamate those questions. Finally, if we run out of time to answer all of your questions, we will answer them in due course via e-mail or by posting responses on our website. Voting today will be conducted by way of a poll on all items of business. To provide you with enough time to vote, I will shortly open voting for all resolutions. Once voting is open, a new voting tab will appear on the online meeting platform for shareholders and proxies who are eligible to vote at this meeting. Selecting this voting tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. Your vote will be automatically recorded. There is no need to hit a submit or enter button. You can change your vote at any time before I declare voting closed. As I mentioned earlier, Chris Dedrick from Computershare will act as the returning officer for the purposes of conducting and determining the results of today's poll. We will announce the results of the poll to the ASX later today. I now declare the voting open on all items of business. The voting tab will soon appear for shareholders and proxies eligible to vote at the meeting. Please submit your votes at any time. I will give you a warning before I declare voting closed. I will now provide a brief overview of our performance during the 2021 financial year and will comment on strategic Board matters and the Board's approach to remuneration planning. I will then ask our CEO, Grant Blackley, to update the meeting on the company's operating performance and outlook and growth initiatives. We'll then move on to the other business to be considered and a vote on the resolutions. SCA delivered sound financial results in the financial year just ended. EBITDA of $125.9 million was up 16.4% compared to the previous year, and net profit after tax improved by 91.6% to $48.1 million. The group's net debt is at historical lows, and the group has achieved significant headroom against banking covenants. Based on the group's financial performance and profits in the second half of the financial year, the Board was pleased to pay shareholders a final fully franked dividend of $0.05 per share on the 1st of October. Despite the group's healthy financial position, many challenges remain. The COVID-19 pandemic continues to create uncertainty for all of us and seems likely to do so for some time. While advertising spending by retail, home furnishing, construction, finance and government recovered or grew during the last financial year, our advertising clients in many other categories continued to be heavily affected by the pandemic. These include automotive industries, live entertainment, travel, accommodation, cinemas, theme parks and sport. With the long lockdowns in New South Wales and Victoria expected to taper off in the coming weeks, there is some light at the end of the tunnel for these sectors. Vaccination rates are, of course, critical to recovery from the public health, economic and social impacts of the pandemic. SCA has strongly encouraged its people to be vaccinated. In addition, to promote vaccine equality, SCA has partnered with UNICEF's Give the World a Shot campaign. For every SCA employee who is fully vaccinated, SCA will donate funds to enable UNICEF to deliver vaccines to protect 10 people in developing countries. Another challenge and a significant opportunity is the continuing trend towards digital consumption and commercialization of media content. SCA's financial outcomes in the last financial year were generated overwhelmingly from advertising on our well-known linear broadcast media assets, our 99 FM, AM and DAB+ Triple M and Hit Network radio stations and 92 television signals reaching 95% Australians. That will be the case in the current year and for the next few years. However, the trends towards digital consumption and commercialization of media content are irreversible and accelerating. The ways in which the majority of our audiences enjoy our content and in which we create value for our advertisers and shareholders will be very different in the foreseeable future. The group's digital revenue grew by 40% to $15.1 million (sic) [ $15.4 million ] during the most recent year. We expect digital revenue to grow by 75% to 100% in the current year, and we've set a strategy to support continuing high growth rates. While the group's Australia-wide radio network remains the creative core of SCA, our teams have a new digital-first mindset. Supported by our technology teams, our content teams are finding ways to make it easy for our listeners to enjoy our radio shows, podcasts, music playlists, news and other local updates anytime and anywhere. The group's sales teams are upskilling to help our clients to understand and optimize their returns from advertising on our digital audio content and platforms. LiSTNR is at the heart of SCA's digital audio-first operating model. Developed in-house and launched in February 2021, the LiSTNR app deploys smart technology to create, distribute and commercialize SCA's digital audio content and a wide range of live and on-demand global, national and local content. Users can personalize their experience on LiSTNR, choosing from a range of live radio, premium original podcasts, radio podcasts, live streaming music channels, news and information. As the signed-in community on LiSTNR grows, SCA will offer advertisers transparent returns on investment by connecting them to targeted audiences at scale. Continuing the development of LiSTNR and our data analytics and sales capabilities will require further investment in the current year and beyond. The group's robust balance sheet and steps taken in recent years to create an efficient organizational structure will support that required investment and enable the group to maintain and improve returns to our shareholders. The operating model for our regional television operations is, of course, very different. As an affiliate broadcaster, we do not create the content we broadcast, and we do not have rights to distribute that content by digital means. Shareholders will recall the strategic actions taken in recent years to streamline the group's television operations. Playout, distribution and broadcast transmission services have been outsourced to specialist providers. Fees paid to program suppliers are a percentage of the revenue generated from advertising, mitigating the impact of the long-term decline in revenue. At the same time, SCA continues to lead the Boomtown regional media industry marketing campaign, which has driven increased investment by national advertisers in regional television and radio. SCA's television operations delivered EBITDA of $38.1 million in the year just ended, up 59.7% compared to the prior year. Whilst this result benefited from government support in the first half of the year, it also reflected the relatively quicker recovery of television advertising markets and SCA's market-leading sales performance. The regulatory framework for regional television remains in need of review and reform. Both Free TV Australia and regional television broadcasters, including SCA, made significant submissions to the federal government's Media Reform Green Paper on modernizing television regulation in Australia. These submissions highlighted the important role free-to-air television plays in Australian life and the regulatory conditions required to enable television businesses to adapt to technological change and sustain their role in Australian life. Current regulation of regional media is out of date, especially in the area of the Internet and video streaming. Regional media operators are prevented from adjusting their business models to compete evenly with an expanding number of local and global competitors. SCA encourages the government to bring regional media regulation into the 21st century before it is too late. Having said that, it would be remiss of me not to acknowledge the support received during the year by SCA and our people from the federal government. SCA was eligible for the federal government's JobKeeper program from April until December 2020. In the depths of the pandemic, JobKeeper was critical to enabling us to stay connected to our workforce. Because of the severe impacts of the pandemic on the media industry, many more jobs would have been lost without the program, and SCA's recovery in the second half of the year would have been more difficult. SCA was also grateful to receive a grant during the year under the Public Interest News Gathering fund, which has supported the group's regional news journalism. Turning now to internal matters. I would like to make a few comments on the Board's approach to executive remuneration in the current difficult economic environment. Our executive remuneration framework is designed to attract and retain high-performing executives and to align their reward with creation of sustainable value for shareholders. In the 2020 financial year, our executive team forfeited all short-term and long-term incentives. While the team worked as hard and effectively as ever during the early onset of the pandemic, forfeiture of all bonuses acknowledged the significant losses suffered by our shareholders during that time. In the year just ended, the Board approved payment of short-term incentive bonuses to our senior executive team but scaled the payments back by between 40% and 50%. The Board's decision to scale back short-term bonuses did not reflect on the effort or quality of work by executives during the year, especially because that work has enabled SCA to return to paying a final dividend to our shareholders. By scaling back bonus payments, the Board sought to reward strong performance by our executive team while ensuring bonus payments reflected SCA's overall financial and performance and outcomes for SCA's shareholders. The Board also wished to acknowledge the benefits of government grants relating to COVID-19 that we received in the first half of the financial year. For the 2021 financial year, the Board implemented a bespoke long-term incentive plan focused on increasing SCA's market capitalization and resuming a reliable flow of dividends over the 3-year performance period to the 30th of June 2023. Total shareholder return is the sole performance measure under that long-term incentive plan. The Board believes that, that was the most appropriate measure to align executive reward with shareholder outcomes given the group's circumstances at the start of the 2021 financial year. As explained in the Notice of Meeting, the Board has adopted a combined executive incentive plan for the new financial year and beyond. The combined executive incentive plan has replaced the former short-term and long-term incentive plans. In reaching this decision and designing the new plan, the Board consulted with SCA's major shareholders and obtained independent advice on market practices and investor expectations. The Board believes the new plan, which will operate over a 5-year cycle, will provide a simpler and more direct way to link executive performance and reward to generation of sustainable positive returns for shareholders. 60% of the annual award will be based on financial performance hurdles. Nonfinancial measures, accounting for 40% of the annual award, will include execution of strategic projects and cultural improvements. The annual award to each executive KMP will be settled partly in cash and the remainder in equity performance rights. These performance rights will be eligible for vesting and conversion to ordinary shares at the end of year 3, subject to ongoing employment. Vesting of 1/2 of the performance rights will potentially be scaled back according to SCA achieving satisfactory growth in earnings per share over the 3 years of the new plan. A further restriction on disposal of vested shares will apply until the end of year 5, 2 years after the allocation of any vested shares. The Board welcomed 3 new directors during the year. Carole Campbell, Ido Leffler and Heith MacKay-Cruise have become active contributors to the Board and its committees, including the Digital Transformation Committee established this year to monitor and guide the progress of LiSTNR and other digital initiatives. I thank all of my fellow directors for their wise counsel during the year and look forward to working with them in the year ahead. I would also like to commend SCA's leadership team, led by our Managing Director, Grant Blackley, and all our people around Australia for navigating SCA through the many challenges of the past 12 months and laying the groundwork for continuing improvements in the years ahead. Finally, thank you to our shareholders for your support of SCA. I'll now invite Grant Blackley to say a few words.

Thank you, Rob, and good morning, everyone. We have begun this year with a true sense of excitement and optimism. We're confident the changes we've made to our business during the pandemic will enable us to achieve our mission over the next 4 years: to entertain, inform and inspire Australians anytime, anywhere. The 4 pillars of our refreshed corporate strategy are to entertain, inform and inspire our audiences and to also establish LiSTNR as Australia's ultimate audio destination; to use our assets to help our clients succeed; and drive and embed a digital audio operating model. Providing compelling audio content is the first and most important requirement for our success. Consistently attracting audiences to our broadcast radio stations and on our new LiSTNR app will drive that commercial success. On radio, we identified several opportunities for growth in the metro markets at the beginning of the calendar year. We created Triple M as an entirely new radio station in Perth in October 2020, adding a new breakfast show featuring the Lord Mayor of Perth, Basil Zempilas. In January 2021, we also launched new breakfast shows on 2Day FM in Sydney and on Triple M in Melbourne. We also added Nick Cody to Fifi, Fev & Nick on Fox FM in Melbourne. We're monitoring the audience response to these new shows and adjusting content and music to meet audience preferences. Particularly in Sydney and in Melbourne, it has been a difficult time to encourage trial and build audiences for new breakfast and drive shows, as government lockdowns and working from home have reduced time spent commuting between home and work in car, and audiences have tended to migrate from FM music to entertainment formats across to AM news and talkback formats. 2Day FM remains our highest priority, given its underperformance for several years against well-established and strong competitors in Sydney. In late 2020, we created state-based breakfast super shows for regional stations in the Hit Network. This has improved the quality and consistency of content on regional Hit Network stations while preserving our commitment to providing local news and other local content during the day. All our radio stations, along with a diverse and rapidly expanding slate of live and on-demand global, national and local audio content, are also available on our LiSTNR app. In the year to June 30, live streaming of our radio stations reached 1.5 million people, up 30% on the previous year. In the month of June alone, our audience has enjoyed 10.5 million hours of livestreamed radio, and we recorded 9.5 million downloads of our podcasts, up 20% on the prior year. This year's Infinite Dial study confirmed that audio is a popular and growing source of entertainment and information for Australians. Every month, 86% of Australians listen to live radio or catch-up radio podcasts and 74% listen to online audio. Awareness of podcasting has reached 91%, while 37% of Australians now listen to at least one podcast every month. To serve this growth in consumption of audio, we're creating more audio content than ever before. Compared to 2016, we recently calculated we are producing nearly 20% more minutes of audio content in 2021. While the volume of our broadcast radio content has reduced over that time, we are producing 50x more minutes of podcasts than we were in 2016. In the years ahead, we will continue to grow our digital audio ecosystem with premium content, platforms and products that are attractive to our listeners and our advertisers. In February this year, we retired PodcastOne Australia app and launched LiSTNR. We are delighted that listening to podcasts on LiSTNR grew 200% in the first 5 months from launch and from a 0 base. Listening to live radio has exceeded podcast consumption. During this year, we plan to migrate users of our pre-existing Triple M and Hit Network apps across to LiSTNR as the single home of SCA's digital audio content. To maintain and build on its early success, LiSTNR needs to attract and retain a listener community by providing premium content and a first-class user experience. To that end, we have a disciplined process for commissioning new original podcasts and for partnering with other publishers, such as SoundCloud, Disney/ESPN and the BBC, all to improve the chances of content being attractive to our audiences and our advertisers. On-demand digital content attracts a broader audience, especially in younger demographics, more so than linear broadcast radio. LiSTNR provides an opportunity for SCA and advertisers to connect willingly to these new audiences. We require users to sign in to LiSTNR and give them the opportunity to express their own audio interests and preferences. This helps users to personalize their experience on LiSTNR, and it helps us to improve the way users can discover new content on this important platform. We have long recognized that our success will be driven by delivering success for our clients. This requires our sales and creative teams to understand our clients' businesses and how our broadcast and digital products can help them succeed. We naturally expect our sales teams to their clients and provide tailored solutions for them. Our in-house training syllabus has been revitalized to build the confidence of our sales teams and optimize their respective performance. These courses provide detailed knowledge about SCA's product, including our growing suite of digital audio content and audience attribution tools, along with fundamental skills for effective selling, critical thinking and tools for motivating, coaching and performing as part of a team. Our advertisers want to know more about the audience for their messaging. To meet these requirements, while respecting our audiences' privacy expectations, SCA tracks and collects information about the characteristics and behavior of our audiences. We're growing our ability to collect and interpret this information to enhance and personalize the services we provide to our listeners and to optimize returns on investment at each of our advertisers. As we build our data and analytics capabilities, LiSTNR will combine transparent audience measurement with real-time insights about listeners' routines, needs and preferences. At the same time, as Chair of Commercial Radio Australia, I'm pleased to say that the commercial radio industry is continuing to invest to evolve our measurement capability. On the 13th of September, CRA announced its new Radio360 audience measurement system. Developed in collaboration with the industry's official survey provider, GfK, Radio360 will see the industry transition from paper surveys to the majority use of e-diaries and importantly, the integration of live streaming data to provide more information on the size and profile of audiences listening across digital platforms. A panel of consumers will also be asked to wear an electronic watch meter to detect when that wearer is in listening range of a radio broadcast and provide encrypted, anonymized information to validate and ensure the accuracy of the streaming data. Coupled with our own investment in LiSTNR, these industry developments will enhance SCA's ability to help advertisers connect to targeted audiences at scale. During the year just ended, teams from all around SCA's businesses participated in workshops facilitated by an organizational design consultant to identify the skills and resources required for SCA to succeed in a world of digital audio. Through these workshops, we also identified gaps in our current business model. To close those gaps, we've established working groups to design new workflows, performance measures and measurement and reporting tools; to educate and upskill our people and recruit where necessary; to educate our clients about the benefits of digital audio advertising products; and finally, to partner with leading content creators and technology innovators from around the world. In April this year, through our innovation program called The Lab at SCA, we asked our people how to make LiSTNR the most engaging audio destination for Australians. Illustrating how innovation and digital-first thinking has become part of our culture, more than 400 of our people submitted entries from 40 of our offices around Australia. After pitches from a select group, our judging panel anointed 3 winners whose ideas are being developed for testing on LiSTNR. Two winners are based in Brisbane and 1 in Griffith, and their ideas cover product enhancements, consumer concepts, content concepts and localism. Another 6 ideas have also been earmarked for further investigation. As Rob mentioned, our digital advertising grew by 40% to $15.4 million in the year just ended. This outcome was underwritten by audience growth and improving monetization in live radio streaming led by the successful launch and maturing of LiSTNR. The actions I've just outlined are all designed to ensure this growth continues and importantly, accelerates for the next several years. I would like now to especially thank our television teams for their performance during the year. In the final year of our Nine Network affiliation, we delivered a solid financial return, including a market-leading power ratio of 1.1. Then supported by a highly collaborative approach from Network 10, we seamlessly transitioned to Network 10 programming from the 1st of July. We also commenced broadcasting Sky News Regional in several regional markets to provide those communities with additional political coverage, breaking news, sport and opinion. Before closing, I'd like to mention the work we've been doing since 2016 to measure our culture with Human Synergistics, a global organizational development consultancy. We believe that looking after our people makes us a more productive and a sustainable business. Our belief start with our values and the importance we place on our culture and leadership. These fundamentals are constant. They inform our people's behaviors and decisions every day and are not affected by short-term factors, even significant factors like the COVID-19 pandemic. I'm pleased to report that Human Synergistics recognized our culture survey results in April this year with its Culture Sustainability Award for maintaining and growing a highly constructive culture that outperforms our peers, of which only 1 -- we were 1 of 3 awards across Australia and New Zealand. Considering the challenges faced by our people and our organization over the last 18 months, these results demonstrate the strength of SCA's culture. I'd now like to update you on our trading performance for the first quarter and our outlook for the first half. Advertising markets have continued to recover with audio revenues in the September quarter growing by 15% against the prior comparative period. This recovery has slowed by the impact of the prolonged state lockdowns in both New South Wales and Victoria, which has been principally felt across September and October. SCA's broad portfolio of assets covering 57 locations around Australia has partially insulated SCA from the adverse impacts of these lockdowns. SCA has also benefited from its exposure to regional television, which has been less affected by the lockdowns and has performed in line with our internal expectations following transition to our new affiliation with Network 10 from the 1st of July. The reopening of New South Wales earlier this week and the plans to reopen Victoria from late October have positively stimulated advertising activity, and we are seeing improving booking demand into November and December. We have remained vigilant and disciplined in managing our controllable costs to mitigate the adverse impacts of weaker markets over the past 2 months. In conclusion, let me thank our people for their expertise, passion and commitment in overcoming the many challenges over the last 18 months. The same expertise, passion and commitment will naturally drive success in the years ahead. Thank you.

We will now move to a discussion of the formal items of business set out in the Notice of Meeting. The Notice of Meeting has been made available to all shareholders and is also available on SCA's website. The explanatory notes in the Notice of Meeting explain the background to each of the items of business. Shareholders have had an opportunity to consider those matters, and I will take the Notice of Meeting as read. However, I do want to make a few comments on today's director elections and succession planning. As I said earlier, Glen Boreham and Melanie Willis are standing for reelection by shareholders today. The Notice of Meeting outlines the Board's recommendation for shareholders to vote in favor of both candidates. Glen and I are now the longest-standing directors of the company, having joined the Board at the same time in 2014. As the company pursues its future as a leader in digital audio, Glen's knowledge and experience in technology matters will be even more valued. He is the Chair of the Board's Digital Transformation Committee and a member of our People and Culture Committee. Melanie joined our Board in 2016. She is a member of the Board's Audit and Risk Committee, having recently stood down as Chair of that committee in favor of Carole Campbell. Melanie is also a member of our People and Culture Committee. Glen and Melanie have each prepared a short video presentation to explain to shareholders their interest in SCA and how they will contribute to its future success. While both of them are participating in the meeting today, to minimize disruption to the meeting and the risks of technical problems, we thought it would be simpler for their presentations to be pre-recorded. We will now play those videos for you.

Thanks, Chairman, and welcome to our shareholders participating in this meeting today. In terms of my reelection, I think I bring 4 skills that are relevant to the SCA Board. Firstly, over 30 years' experience in the information technology industry. Secondly, I was Chairman of Screen Australia for 6 years, creating first-rate creative Australian content. In addition, I chaired a review for the Australian government into media regulation. And then now I've been on ASX-listed Boards for over 10 years with experience in that. A key reason I'm seeking reelection is that under the chairmanship of Rob Murray, we set up a new Digital Transformation Committee on the Board, and Rob asked me to chair that. And we started relatively recently in November of 2020. As more of our audience move to accessing our content via digital means, that gives SCA a wonderful opportunity to deepen relationships with our listeners and viewers, to improve outcomes for our advertisers and ultimately, what it's all about, improve return to shareholders. You will have heard from earlier presentations about the success of our LiSTNR application to date but also, the enormous growth opportunity that, that has. And that is really a cornerstone product of our digital transformation. So I seek your support to be reelected to continue this journey, to work with my Board colleagues and SCA executives on seeing through this phase of the transformation. Thank you.

It's been a real pleasure and privilege to serve you on the Board of Southern Cross Austereo for the last 5 years. As a nonexecutive director, I aim to bring a range of complementary skills and experience to the team, which I believe will assist the Board to collectively deliver on SCA's mission to be a digital-first national audio company. I have a deep understanding of strategy and innovation, particularly as it relates to digital ecosystem's growth and platform players, where technology is being deployed as an enabler for transformational customer experiences. I have expertise in holistic risk management. I appreciate the value of opportunities and challenges that risk brings and the need to deeply consider strategic, operational, financial and cultural risks and ensuring that risks are understood and there is appropriate accountability for managing those risks and appropriate expectations for risk-adjusted returns. I have an investor and owner mindset, having previously been a Chief Investment Officer and a CEO of a financial services start-up. And I have expertise in capital raising, mergers and acquisition and capital management. I'm a values-based leader, focused on the importance of diversity and inclusion and understanding the perspectives of all stakeholders to drive better decision-making. I'm naturally curious, a continuous learner and focused on continuing to develop a deep understanding of changing consumer behavior and how technology and data can enable better outcomes for customers and companies. I'm looking forward to continuing to work with the Southern Cross Austereo team as they efficiently continue to deliver outstanding linear radio experiences in regional and metro radio and build a strong and compelling digital audio presence through the LiSTNR platform and DAB+ digital audio. Thank you very much for considering my reelection to the Board of Southern Cross Austereo.

Thank you, Glen and Melanie, for your presentations, and thank you also to those who helped integrate them into today's meeting. Let's now turn to the other items of business on the agenda. Rather than step through each item of business, I'm going to accept submitted questions on all items of business now. The online platform is still open, so you still have some time to submit a question if you haven't already done so. As I mentioned earlier, the poll is open on all items. If you haven't yet voted, I encourage you to do so now. I will close the voting at the end of question time. The number and percentage of valid proxies received before the meeting are now shown on the screen. These proxies have been reviewed in accordance with the Corporations Act and the ASX Listings Rule. And any new proxies or any proxy votes required to be excluded by those requirements have been excluded from the numbers that you can already see on the screen. The next slide shows the valid proxy votes received before the meeting for each item of business. As shareholders are aware, there is no requirement for a vote in relation to adoption of the financial report, although we, of course, welcome any questions. This slide will stay up for the remainder of the meeting. You will see there's healthy support for all resolutions. While there might be some votes to come in today, I thank shareholders for their support to date and in particular, congratulate Glen and Melanie on their reelection or election as directors. Turning now to questions. I'm now going to ask Rochelle Burbury, our Corporate Communications Director, to let me know whether we've received any additional text questions during the meeting and whether any shareholders wish to ask a verbal question.

Yes, we have some questions. The first question -- sorry, Rob.

Go on. That's all right. You go.

The first question is from Mr. [ Ian O'Mara ]. And his question is, "What is the target share price for the financial year-end?"

Thank you for your question. I think you would appreciate that we don't set specific targets for share prices. The market will determine the value of companies in due course. What we certainly put in place, though, because we're very cognizant of trying to improve shareholder value, is a series of targets through our budgeting processes and a series of reward schemes to encourage, incentivize or reward executives to try and improve in shareholder outcomes. And therefore, ultimately, in the long term, that should lead naturally to an improvement in the share price. But what we set is targets within specific years. We then declare in our remuneration report retrospectively how we performed against those targets and the remuneration outcomes that we've reached. We are always conscious of trying to build shareholder value, particularly as we look forward to the recovery in our advertising market. But it's not a specific target we set. So thank you for your question.

The next question is from Mr. Stephen Mayne. And his question is, "How much JobKeeper did we receive in total? And why haven't we paid any back like other companies such as Cochlear, Premier Investments, Harvey Norman and Super Retail Group? If our revenue didn't drop by the required 30%, on what ethical grounds do we claim JobKeeper from March until December last year?"

Thank you, Mr. Mayne, for your question. SCA received JobKeeper from the 1st of April 2020 to the 3rd of January 2021, which obviously spanned across 2 of our financial years. SCA's eligibility was based on its actual turnover being more than 30% below the prior corresponding periods for the quarters ended the 30th of June 2020 and the 30th of September 2020. Across the 2020 calendar year, SCA's revenue was more than $110 million less than the 2019 calendar year. The ATO has reviewed SCA's JobKeeper claim and were satisfied with the outcome. While much media attention has been devoted to large companies receiving JobKeeper, Treasury's recent report show that of the JobKeeper payments that went to companies whose turnover did not reduce by at least 30%, over 80%, $22.5 billion of that payment, went to companies with turnover below $50 million, so obviously much smaller than ourselves. I should also -- so as I said earlier that with regard to JobKeeper, the Board was cognizant of the impact of JobKeeper in our business and chose, as I alluded to in my speech, to pare back any short-term incentive payments for our leaders such that our leaders did not benefit from a period of performance when JobKeeper was paid. In fact, our leaders were only rewarded for our second half, which coincided with a return to -- dividend returns for our shareholders. So thank you for your question.

We have another question from Stephen Mayne. "In my opinion, Sky News is a disgrace with its endless climate denialism, regular soft interviews with Pauline Hanson and its pandering to the dangerous anti-vax movement. Why are we amplifying their toxic message in regional areas on our television platforms? And do we have a contractual power in the agreement to terminate the arrangement if they remain Australia's most reckless, divisive and damaging news outlet?"

Okay. I think there's a question in there. There's obviously some strong opinions. I might ask Grant to cover our views on this. We have a number of questions on this topic, so we can probably answer them all collectively.

Thank you, Rob, and thank you, Mr. Mayne, for your question. We don't expect that all Australians will agree with views expressed on the Sky News Regional channel. However, freedom of speech is a fundamental tenet in Australia. As a democracy, Australians expect to see a range of views as the media covers all perspectives of the issues facing communities. Sky News Regional has been clear that it does not shy away from the broad spectrum of opinions for any news story that impacts Australians. Sky News Regional has resonated with audiences it reaches through SCA. While there is a minority of voices that are part of a coordinated political campaign whose aim it is to lessen media diversity, it is pertinent, in our opinion, to point out that Sky News is not being found in breach of any broadcasting code of practice over the last 10 years. As an affiliate television broadcaster, SCA also broadcast news, current affairs and other programs from Network 10 and in some markets, from the Seven and Nine Networks as well. Our 2.8 million regional television viewers have access to a wide range of news and opinion on matters of interests to all Australians. SCA also operates Australia's largest radio network and our growing LiSTNR digital audio network, our audio news and entertainment programs, reaching around 7 million Australians every week.

Thank you. We have another question from Mr. Mayne. "Will an archive of the webcast of today's AGM be available on the Southern Cross website? And will you also undertake to publish a full transcript similar to what companies such as ASX, AGL, Westpac, IAG and Woolworths do? Why isn't the archive of past AGM webcasts available on your website?"

Okay. Thank you, Mr. Mayne, for your question. We're all adapting to the bright new world of webcasting our AGMs, and this webcast will be available after the meeting today. Only last year's AGM prior to this was webcast. We were obviously in the pandemic at that stage. There has not been in the past the same level of interest about previous AGMs. But you raise a fair point, and we can certainly consider making them available on our website. So we will do that. So thank you for your question.

And another question from Mr. Mayne. "With the benefit of hindsight, do the Chair and CEO agree that we grossly overpaid for Austereo in 2011, shelling out $741 million, which was funded by $471 million, 6 for 7 capital raising at $1.45? Factoring in last year's 10 for 1 consolidation, our shares were trading at the equivalent of $21.60 before the Austereo takeover was announced. Can the CEO cite any media acquisitions over the past 12 years that were worse than this one, given that our market capitalization is now only $558 million today?"

Again, I think there's a question in here. The view -- I mean, the data and facts in there, I certainly wouldn't dispute, Mr. Mayne. I think that in fairness, I think most people would realize, the merger you're talking about happened over 10 years ago. None of our current Board or senior executives were in the business at that time. The current Board and executive team are quite rightly, in my view, focused on the future of SCA and believe we have a suitable digital audio-first strategy that will create long-term value for our current shareholders going forward. And I think you probably agree that the best use of that time is to focus on that future and try to realize that value. So again, thank you for your question.

And another question from Mr. Mayne. "Why did we agree to delete the Jessica Rowe podcast interview with Pauline Hanson? Where does the power lie between the company and the talent in terms of canceling content? Has the Chair or CEO had any dealings with Pauline Hanson after this event, given we may need One Nation's support in the Senate to get regulatory change in regional areas?"

Again, thank you for the question. I might invite Grant to respond to that, given that he gave a response on content before.

Yes. Thank you, Mr. Mayne. The social media response to the podcast did have a strong impact on Jess. As a result, she asked SCA to remove that podcast. And after a discussion with her, we agreed to do so given the circumstances of this particular case. Neither myself nor the Chair has had any discussions with Pauline Hanson about the podcast or about media regulation.

Thanks. Another question from Mr. Mayne. "Is it appropriate for us to be paying the current Lord Mayor of Perth, Basil Zempilas, to deliver a breakfast program on Triple M Perth? Isn't this a conflict of interest and a breach of the idea that media should remain independent of politics? Would we pay a Premier or a Prime Minister to have their own radio show? Where do we draw a line on this issue?"

Thank you again for your question, Mr. Mayne. I'm going to ask Grant again to respond to that.

Yes. Thank you again, Mr. Mayne. As you know, independence is important to SCA. Basil Zempilas was not Lord Mayor, for the record, of Perth when we first recruited him. In fact, when he was elected as Lord Mayor, we worked closely with him and other members of the new Triple M breakfast show to establish clear protocols for him and for the entire show. These protocols are designed to ensure that the show steers away from topics of local political controversy in Perth. And if we have any doubt with regard to the subject matter, the team is encouraged to discuss their topic and ideas with the content director and, of course, our legal team. To date, all of these protocols have worked exceptionally well. And as you would know, Mr. Zempilas has a number of media engagements outside of SCA as well, which do include the Seven Network.

And a final question from Mr. Mayne. "Does the Board acknowledge that last year's $169 million equity raising at $0.09 badly diluted retail shareholders without any compensation? Do you recognize that the $47 million placement component was too large and that nonparticipating retail shareholders should have been compensated for their dilution? Why not offer retail shareholders a discounted $30,000 share purchase plan to make up for the fact that we only contributed $12 million to the $169 million raising last year?"

Thank you, Mr. Mayne, again for your question. The equity raising conducted in April last year has placed the company in a strong position for the future. It's often easier to consider these matters when you have the benefit of hindsight. But at the time, I think that was a clearly appropriate action to take. The proceeds have been applied to reduce the group's net debt to historical lows. The equity raising was conducted at a time of great uncertainty as the pandemic had a severe impact on SCA and other Australian media businesses. The placement component and the shortfall in the institution and retail entitlement offers were taken up by existing shareholders. In summary, we think we took responsible action at the right time responding to a significantly challenging situation. And I think without the benefit of the hindsight we have now, it was the right thing to do. So thank you for your question.

We have a question from Mr. [ Markus Fitzgerald ]. He says, "I congratulate SCA for making the significant investment in establishing Australia Today. The content has been high quality from week 1 and has a more modern presentation style compared to national and commercial AM talk choices. SCA has invested heavily in digital radio. Australia Today is available across its digital multiplexes nationally. Why then is the fact that show has its own digital radio presence of live and looped content never mentioned on air or in external marketing? Whilst outdoor advertising exemplars for Australia Today were pictured in the annual report, in Brisbane, the only external marketing for LiSTNR content has been for more photogenic talent such as Dannii Minogue. When will external advertising for Australia Today commence? Also, why is Australia Today networked to regional Triple M stations in New South Wales, Southern Queensland and SA but not SCA's 5 regional Victoria markets, which is Steve's home state? As a shareholder, I'd like to see more leverage of this show."

So thank you, Mr. [ Fitzgerald ]. I'd like to thank you for your enthusiasm in this new offering. I might invite Grant to comment on that.

Yes. Thank you for your question. We are enormously proud of a range of new content that we've developed under the LiSTNR banner and most importantly, as you highlight, Australia Today. And the first installment in that was with Steve Price, as you would rightly know. I can comfort you in the fact that we do have external marketing for Steve in out-of-home that includes large format and bus shelters across various markets. Respecting that this is a relatively new show, a new program that is an on-demand vehicle, we are building momentum behind this particular brand and expanding that brand as we speak. And to that end, the marketing will follow, along with the monetization, of course. So be rest assured that we feel that Australia Today is an important part of our product suite. In relation to the networking of that product, there was a direct installment of that product to replace a prior product that we got as a third party from Nine Radio with Mr. Hadley that was swapped over. And we now have direct control of our own broadcasting and the regulation that follows with that, which we think is vital in the -- with the markets that we adopted first. It's not to say that we won't adopt additional markets in due course. Thank you for your question.

We have a second question from Mr. [ Markus Fitzgerald ]. "2Day FM Sydney has suffered since the departure of Kyle and Jackie O as breakfast talent. Subsequently, almost annual changes to breakfast talent has not resulted in any increase in audience share. 2Day is 1 of 3 Sydney commercial stations with a similar hit music format. Why does SCA continue with this format instead of exploiting one of the more profitable market gaps that are not well served by SCA or competitors?"

Yes. Thank you again, Mr. [ Fitzgerald ]. In relation -- I think we've called out 2Day very clearly that 2Day FM is our primary focus. And you are right, it did suffer from the decision and departure of both Kyle and Jackie O back so many years ago. We have made a number of changes to that format to aim to create a program that resonates with audiences. I can tell you that the program that we have put in with Hughesy, Ed & Erin, we believe in firmly as a new target that will appeal to marketers. And in the most recent survey, we saw some subtle positive changes to those -- to that feedback that is resonating. We're not here today to share with you our complete content strategy as to what we will deploy, how we will deploy it. But be rest assured that every single aspect of 2Day's breakfast show, from the intro to the outro, to the product that is performed by our hosts, to the music and composition of that music, is looked at on a continuous basis to nurture and improve the format. So we will continue to do that up against what is a very tight market and a very buoyant market with some very strong competitive set against us.

We do have one final question from Mr. Mayne. "Thanks to the Chair for disclosing the proxies ahead of the debate and also for disclosing that 369 shareholders voted by proxy. Not many companies reveal voter numbers. Will Rob match the precedent he recently set at Metcash by revealing the final for and against outcome on the company website in terms of both shares and shareholders?"

Thank you, Mr. Mayne. We will indeed disclose these details after the results are final today. So yes, you'll be able to see those and access those just as you could in the -- on the other Board you referred to. Thank you for your question.

And we do have one more question from Mr. Mayne. "Eddie McGuire has been paid many millions by Southern Cross Austereo for his Triple M Melbourne work over the decades. Did he ever get aligned by taking a shareholding in the company? And are we still paying him after the breakfast show contract ended last year?"

Thank you again, Mr. Mayne. In relation to Mr. McGuire, yes, he did serve our company very well for many years in Melbourne. I can't tell you today if he is -- remains a shareholder, but he did hold shares through the course of his tenure with SCA. And I can confirm that he is not being paid by SCA at this point to perform any function. Thank you for your question.

Thank you. There are no further questions.

Okay. Understanding that there are no further questions, I will move on. That concludes our discussion on the items of business and all the matters we need to cover in our meeting today. In 1 minute, I will close the poll. Please ensure you have cast your vote on all resolutions that you're entitled to vote on. I will now pause to allow you time to finalize your votes. [Voting]

I will now close the online voting system and the polls. The final poll results will be released to the ASX and posted on the company's website when they're available later this afternoon. On behalf of the Board, I would like to thank you for participating in today's AGM. I hope you've enjoyed the online format and that you and your families continue to stay safe and well. With that, I now close the meeting. Thank you.