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'm joining here today from Sydney and would like to begin by acknowledging the Traditional Custodians of the land on which we meet today, the Gadigal people. I pay my respects to their elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander People joining us here in Sydney or elsewhere as part of our virtual meeting. 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 in person in our Sydney office and virtually using an online platform provided by Computershare. This platform allows shareholders, proxies, corporate representatives and guests to attend the meeting remotely by watching a live webcast of the meeting. In addition, shareholders, proxies and corporate representatives can ask questions and submit votes in real time. To allow sufficient time for those participating online to ask questions or votes, I now declare voting open on all items of business. I will provide an opportunity for those in the room to ask questions and vote later in the meeting. Before moving to some housekeeping matters, I'd like to welcome and introduce my fellow directors who are joining the meeting today. John Kelly, our CEO and Managing Director. As you will be aware, this is John's first AGM in his new role, I will ask John later in the meeting to provide an update on the company's trading performance and our business strategy for 2024 and beyond; Glen Boreham, who is Chair of our Digital Transformation Committee and also sits on our People and Culture Committee; Ido Leffler, who is a member of the People and Culture Committee and the Digital Transformation Committee; Carole Campbell, who is Chair of our Audit and Risk Committee and a member of our Digital Transformation Committee; Heith MacKay-Cruise, who is Chair of our People and Culture Committee and a member of our Audit and Risk Committee; Helen Nash sits on our People and Culture Committee and our Audit and Risk Committee. Carole, Ido and Heith resign by rotation at today's meeting and offer themselves for reelection by shareholders. We are also joined today by several members of the company's executive team, including Tim Young, our Chief Financial Officer; Tony Hudson, our Company Secretary; and Rochelle Burbury, our Head of Corporate Communications. Tony and Rochelle will assist with online questions from shareholders later in the meeting. 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, Gemma Coyle from Computershare is also with us today. Gemma 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 vote and ask questions during today's meeting. Voting today will be conducted by way of a poll on all items of business. As I mentioned earlier, I have opened voting on all items for those participating online and who are eligible to vote. You will see a voting icon is available on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. For those voting online, you are free to submit your votes at any time. To cast your vote, simply select one of the options for each resolution. Your vote on each resolution will automatically be recorded. There is no need to hit the submit or enter button. Please ensure you cast a vote for all resolutions. Once you have voted, you will receive a vote confirmation notification on your screen. You can change your vote at any time before I declare voting closed. To change or cancel your vote, click the link label Click Here to change your vote at any time before the poll is closed. For shareholders, proxies and corporate representatives present in person, I'll ask you to vote once we've gone through all items of business today by completing the yellow voting card provided to you when you registered for the meeting this morning. White cards are for visitors who cannot vote or ask questions today. Shareholders without a yellow card are not entitled to vote on the items of business. I will provide a warning before I close voting at the end of the meeting. As I mentioned earlier, Gemma Coyle 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. It is my duty as Chair to ensure shareholders have a reasonable opportunity to ask questions and discuss the items of business during the meeting. Because this is a hybrid meeting, I'll first take questions from those physically present at the meeting, followed by audio questions from participants who have joined us online and finally, written questions from online participants. If you're attending the meeting in person, only shareholders and validly appointed proxies and corporate representatives who were given a yellow or green card upon registration are entitled to ask questions. For those attending in person, when I call for questions, please raise your yellow or green card and state your name or the organization you represent before asking your question. For those attending the meeting online who wish to submit a written question, you may do so at any time during the meeting via the speech bubble icon on your screen. [Operator Instructions] You can submit written questions online at any time, and I will address your questions at the relevant time in the meeting. While time constraints may prevent us from answering all questions, we'll do our best to address all your questions during the meeting. If we run out of time to answer all your questions, we will answer them in due course via e-mail or by posting responses on our website. The Computershare platform also provides a facility for audio questions. To use this service, please follow the instructions below the broadcast window. Either I or one of my Board colleagues will address your questions towards the end of the meeting. Where appropriate, I will ask Trevor Johnson from PricewaterhouseCoopers to respond to any questions received about conduct of the audit. Your questions may be moderated. And if we receive several questions on one topic, we may amalgamate those questions. Again, if we run out of time to answer all your questions, we will answer them in due course via e-mail or by posting responses on our website. I will now provide a brief overview of our performance during the 2023 financial year and will comment on strategic direction, Board matters and the Board's approach to remuneration planning. I will then ask our CEO, John Kelly, to update the meeting on the company's operating performance and business strategy. We'll then move on to the other business to be considered and a vote on the resolutions. As shareholders are aware, last week, we received a nonbinding indicative offer from a consortium made up of ARN Media and Anchorage Capital Partners for ARN to acquire 100% of the shares in SCA and then to reorganize our and ARN's respective radio, television and digital assets. The consortium proposes that, in return for transferring shares in SCA, our shareholders would receive a combination of cash and shares in ARN. While we have no knowledge of the proposal before receiving it last week, we are not surprised that potential acquirers are interested in SCA's assets. As the home of the Hit and Triple M national radio networks, a regional television network and our growing LiSTNR digital audio ecosystem, SCA is one of Australia's leading media companies reaching 95% of the Australian population. In the financial year just ended, audiences for our core radio and digital audio assets grew to record levels, and we increased our commercial share of metro and regional radio and digital audio markets. With a weekly national audience of 9 million Australians, our 88 Triple M and Hit Network radio stations reached 2 million more people than any other Australian commercial radio network. Our 10 metro Triple M and Hit Network radio stations now deliver a combined #1 overall share of listening nationally, including leading the key 25-to-54 men, women and all people buying demographics. Australians increasingly are choosing to enjoy our live radio music streams and podcasts on their mobile phones and other Internet-connected devices. This has seen signed-in users to LiSTNR surge to more than 1.6 million and around 8 million Australians now listen to one or more of over 800 podcasts on our LiSTNR podcast network every month. Our advertisers benefit from the mass reach of our broadcast radio and television networks and also from our increasing ability to target messages to more diverse and niche audiences through digital audio. As a result of these trends, LiSTNR is on target to be profitable in the last quarter of this financial year and beyond. Our Board believes that equity markets for some time have undervalued our business, both as it is today but also the growth opportunity in digital audio and in our LiSTNR ecosystem specifically. The proposal we've received from ARN and Anchorage is complex and highly conditional. Our Board and executive team are assessing it carefully to work out whether it could create additional value for our shareholders and whether the proposed terms are in our shareholders' best interest. Since receiving the proposal last week, we have set up subcommittees of our Board and management to consider the proposal, and our financial and legal advisers have held initial discussions with the consortium's advisers. I understand many of you will be interested to hear more about our progress in assessing the proposal. However, we remain at an early stage, and there is nothing further we can tell you today. We will, of course, update our shareholders if there are material developments in our discussions with the consortium. In the meantime, let me assure you that our focus in considering the proposal and in continuing to operate our business is on growing value for our shareholders. Turning now to internal matters. I would like to make a few comments on the Board's approach to executive remuneration. As explained in our annual report, the group did not achieve this year's profitability and financial performance measures, except in relation to management of nonrevenue-related costs. The group's failure to achieve these targets was due largely to declines in radio and particularly in television and advertising markets. The group performed reasonably in areas we could control, growing commercial share in metro radio and especially in digital audio, achieving a parity sales-to-ratings power ratio in regional television, investing in our LiSTNR growth engine and in controlling costs. The Board assessed that our leadership executives achieved between 29% and 59% of their incentive opportunities during the year. However, considering that the corporate financial outcomes fell short of targets and the significant deterioration in SCA's share price during the year, the Board exercised discretion to reduce the awards of all leadership executives to be between 20% and 50% of their respective opportunities. Under our executive incentive plan, half of each executives' award and 40% of the CEO's award have been paid in cash. The remainder has been settled by grants of equity performance rights that will be eligible for vesting after the 30th of June 2025, strongly aligning executives' interest with those of other shareholders. Members of the executive team who resigned during the year received their cash entitlements but have forfeited their performance rights. Shareholders will recall the group's final long-term incentive plan established in 2021 financial year was eligible for vesting on the 30th of June 2023 with a single performance measure of total shareholder return over the 3-year performance period to the 30th of June 2023. This plan focused on increasing SCA's market capitalization and resuming a reliable flow of dividends over that period. While the group has resumed payment of dividends and conducted an on-market buyback during the year, the group's market capitalization deteriorated over the 3-year performance period. As a result, the threshold TSR was not achieved, and the performance rights granted this plan did not vest. There are no other performance rights outstanding under the group's former LTI plan. The Board oversaw several changes in SCA's senior executive ranks during last financial year. On the 1st of July, John Kelly stepped up as Managing Director and Chief Executive Officer. John brings extensive strategic operational financial leadership experience from 25 years working for Australian media and sporting organizations, including the last 7 as SCA's Chief Operating Officer. We are also pleased to welcome Tim Young as Chief Financial Officer and Seb Rennie as Chief Commercial Officer. These internal and external appointments were assisted by the robust succession planning process undertaken by our Board and executive team in recent years. Under John's leadership, our refreshed, refocused and streamlined executive team has clear goals to drive improvements in financial performance and returns for shareholders in the year ahead. I would like to thank my fellow directors for their guidance and support during the year. And on behalf of the Board, I would also like to thank the group's leadership team and our people all around Australia for their dedication, creativity and commitment. I now invite our CEO and Managing Director, John Kelly, to say a few words.

Thank you, Rob, and good morning, everyone. I'm pleased to speak to you today for the first time as SCA's CEO and Managing Director. Having been with SCA as Chief Operating Officer since 2016, I strongly believe in our mission to entertain, inform and inspire Australians anytime, anywhere. I have an intimate understanding of our radio, digital audio and television portfolio of assets. And I'm confident that our strategy, including the digital transformation of our business model, positions us for future growth and improving returns for shareholders. I'm also a champion of our Proudly National, Fiercely Local mantra. As the world becomes more global and more digital, our connections to local communities become even more important. Put simply, localism is the antidote to globalism. Our 1,600 people located across the length and breadth of Australia live, work, play and actively contribute to their local communities. Our radio and digital audio content is relevant to those local communities, and our advertising services support thousands of local businesses. We did not achieve our revenue and profitability targets in the 2023 financial year, and broadcast advertising markets remained challenging. In these circumstances, we are continuing to drive initiatives to grow our share of available advertising markets and improve our operating efficiency. We did well in the face of inflationary pressures last year to reduce nonrevenue-related expenses by 1.3% and total expenses by 2%. As I'll mention later, we have continued to actively reduce our cost base in the current financial year. For the future, SCA is all about audio. This includes broadcast of live stream radio, music streaming, live sport and on-demand podcasts. Radio is alive and well, and our radio shows continue to provide large and engaged audiences for our advertisers' commercial messages. A Deloitte Access Economics report in August 2023 found that 17 million Australians listen to commercial radio, while the 2023 Infinite Dial Australia study found that 81% of Australians, aged 12 or older, listen to digital radio monthly. This includes live radio as well as catch-up podcast of our radio shows. As Rob mentioned, our Triple M and Hit Network radio stations have 9 million weekly listeners. The Hit Network is the #1 metro Network for women, and the Triple M Network is the #1 metro network for men in the coveted 25-to-54 buying demographic. We've been pleased in recent metro radio surveys that 4 of our benchmark Breakfast shows have consistently achieved the #1 or #2 commercial FM share in their cities. They are Fifi, Fev and Nick on Fox FM in Melbourne; Roo, Ditts and Loz on Triple M in Adelaide; Stav, Abby and Matt on B105 in Brisbane; and Pete, Matt and Kymba on Mix in Perth. In Sydney, our Triple M and 2Day FM Breakfast shows have both significantly grown their cumulative audiences. Our Triple M Network holds valuable rights for the most popular sports in Australia, being AFL, NRL and international cricket. In all cases, we hold radio broadcast rights as well as digital audio streaming rights. This has expanded the Australia-wide audience for Triple M's leading coverage of these sports, benefiting our audiences, the sports themselves and, importantly, our advertising partners. One of the largest spikes we have seen in sign-ups to LiSTNR occurred when we launched our international cricket coverage on LiSTNR in regional Australia. Our audiences increasingly are choosing to enjoy our radio shows on digital devices: mobile phones, tablets, laptops, desktop computers, smart speakers and car dashboards. And many of our listeners are choosing to listen to a podcast or watch highlights on social media of our radio shows at a time and place that suits them. To meet this demand, our radio teams think digital first, so our radio shows can continue to grow and engage our audiences on the platforms our audiences prefer. Increasing consumption of our radio shows, music streams and podcasts on digital devices means we are building a deeper understanding of our listeners. The more we know about our listeners, the more we can personalize and enhance their experience on LiSTNR to keep them on the platform to discover and enjoy more of our content. We know from surveys that consumers now expect companies to deliver personalized interactions and will leave a brand when this doesn't happen. That's why we're developing sophisticated data analytics and insights capability to provide our listeners with a rich and personalized user experience at all touch points of our LiSTNR ecosystem. And lifting the loyalty of our audiences on LiSTNR means we can also provide richer data and audience insights to help our advertising partners connect to relevant and valuable audiences. While our broadcast radio and television assets will continue to provide our advertising partners with valuable reach for their messages, that reach is largely to an unknown audience. Smaller but targeted audiences of known users in digital environments such as LiSTNR are highly attractive to our advertising partners who will pay a premium for improved targeting of their message. Our investment in LiSTNR to further improve the user experience, enhance our data analytics capability and expand the volume and diversity of the available content is directly serving the needs and preferences of our listeners and advertisers. It will also mitigate the impact of foreshadowed removal of cookies from online environments. And this will make first-party data from users on LiSTNR more necessary and more valued than ever. For digital audio, the digital advertising market in Australia was valued at $14.2 billion in 2022. At present, that market is dominated by Meta and Google, which account for about 2/3 of digital advertising expenditure in Australia. There is an appetite among media buyers and advertisers to broaden their advertising technology stack to reduce their reliance on these global players and to incorporate other platforms, including digital audio. The digital audio advertising market in Australia has most recently been valued by the Internet Advertising Bureau at $235 million, which is just 1.6% of the total digital advertising market. Clearly, there is a huge opportunity. And with more than 1.6 million signed-in users and a total digital audience of more than 8 million monthly listeners, LiSTNR is well positioned to take a meaningful share of the growing digital audio advertising market. It is also worth highlighting that LiSTNR is fully owned, developed and controlled by SCA. International and local leading podcast publishers, including Wondery, SiriusXM, Schwartz Media and Diamantina Media, have sought us out for hosting, creative and sales partnerships. LiSTNR is not yet 3 years old, and we are looking forward in the years ahead of delivering the benefits to our shareholders, our partners and our communities. Before giving you an update on current performance in trading, I will touch briefly on our regional television operations which, as shareholders are aware, dragged on our results in the most recent financial year. Audiences for broadcast television are in long-term decline. As is the case for listeners to our audio products, television viewers are migrating to digital consumption, including the BVOD offerings of our metropolitan program suppliers. Advertising markets for broadcast television are declining in parallel. And in our case, the decline has been exacerbated by comparatively softer ratings performance by Network 10 programming and our regional television competitors having more unified sales processes. Our television sales teams did well to achieve a parity sales-to-ratings power ratio in our Network 10 markets in the most recent financial year. We are in active discussions with Network 10 to extend our affiliation beyond 31 December and to streamline our collective offering to media agencies and national advertisers with a view to stabilizing returns to SCA and our shareholders. We'll update shareholders once these discussions are complete. I'd now like to update you on our performance for the current financial year. Advertising markets remain short and inconsistent. Our cost-out program to date has exceeded the upper end of previous guidance, both on an annualized basis and for the current financial year. This means we will reduce our annualized cost base by more than $15 million with net savings of more than $10 million to be realized in the current financial year. Most of these savings will be realized in the second half, and we expect total growth for costs will be below CPI for the full year. Net CapEx for the full year is forecast to be in line with previous guidance of around $17 million. Broadcast radio revenues remained steady and are tracking in line with the prior year. Digital audio revenues continues to perform strongly and ahead of our radio peers. We confirm our guidance that LiSTNR will reach an EBITDA breakeven run rate in the final quarter of this financial year. Television remains challenged, with first quarter revenue below the prior corresponding period and second quarter revenues pacing to remain that way. In conclusion, we love what we do at SCA, and we're driven to best use our powerful brands, scale, creativity and technology to build value to our listeners, communities, advertisers and, most importantly, our shareholders. I join Rob in thanking our people for their contributions to achieving these goals. Finally, I confirm that commitment to converting the ongoing growth in our live and on-demand audio audiences to meaningful positive returns for our shareholders this year and in the years to come. Thank you.

Thanks, John. We will move now 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, Carole Campbell, Ido Leffler and Heith MacKay-Cruise are standing for reelection by shareholders today. The Notice of Meeting outlines the Board's recommendation for shareholders to vote in favor of their reelection. Carole, Ido and Heith all joined our Board in 2020, and they have been active and valuable contributors to our Board and committees during the past 3 years. Each of them sits on 2 of the Board's committees. Carole chairs our Audit and Risk Committee, and Heith chairs our People and Culture Committee. I will now ask each of them in turn to make a short statement confirming their interest in the company and how they will contribute to its future success. First, Carole and then Ido and Heith.

Terrific. Thanks, Rob, and good morning, ladies and gentlemen. My name is Carole Campbell, and I'm honored to be standing today for reelection to the Board of Southern Cross Media. As Rob mentioned, I joined the Board of SCA in September 2020, which was just 6 months after the start of the COVID-19 pandemic. And an early focus was safely navigating the many operational and economic challenges of the pandemic while keeping our teams safe. In February 2021, 6 months after I joined, we launched our proprietary LiSTNR app. And today, only 2.5 years after launch, we already have over 1.6 million signed-in users. As signed-in users, we know more about our listeners, and we continue to develop our data analytics and insights capability to provide our listeners with a rich and personalized experience. And in turn, we are able to offer our advertising partners the data and audience insights they need to connect with targeted and valuable audiences. As John mentioned, we are on track for LiSTNR to reach an EBITDA breakeven run rate in Q4 of this financial year. We have made, and I have supported, the significant investment in LiSTNR in recent years, and I believe we are now on the cusp of seeing the rewards for investors for this future-facing investment. What can I personally bring to the Board of SCA? Well, my executive career was spent in CFO and other senior finance roles in a range of industries, including media. At SCA, as Rob mentioned, I chair the Audit and Risk Committee, and I use my commercial finance experience to ensure we have effective financial and operational controls and risk management practices. In September, SCA published our third annual sustainability report, and we're continuing to develop our practices in reporting in this area. We've recently completed a carbon emissions inventory and continue to develop plans to reduce our emissions over time. But it's not all about numbers for me. I have a strong personal interest in content creation, telling Australian stories and getting opportunities for Australian talent to develop their careers. I'm Deputy Chair of the Australian Film, Television and Radio School, and many of our graduates go on to having great careers in broadcast radio and digital audio. Localism is at the heart of what SCA does, and nobody has a richer audio content specifically directed to Australian audiences than SCA. Finally, as a former CFO and as a shareholder myself in SCA, I'm acutely focused on the outcome of all of our actions for the returns for our shareholders, both in the short and long term. It will be with this clear lens that I would join with my colleagues in evaluating the proposal that we recently received. And my thanks to you all in advance for your support.

Thanks, Rob. Fellow shareholders, Board members, team, I stand before you today with a profound sense of purpose and commitment, seeking your support for my reelection as a director of SCA. Throughout my tenure, I've been witness to our organization's resilience post the formidable challenge caused by the pandemic. We've reignited our vision with renewed determination. As a director, I have been proud to be part of a Board that is dedicated to ensuring that SCA remains at the forefront of the industry, actively engaging with our talented team, nurturing creativity and fostering an environment of continuous improvement. In the ever-evolving sphere of media, the need for agility and forward thinking is paramount. In my hopefully next term as director, I look forward to advocating strategic investments in technology, content and the nurturing of our talent. My commitment extends beyond that to promoting diversity and inclusion not only within our workforce but also within the content that we deliver. Furthermore, I will continue working with my fellow Board members to champion our dedication to corporate social responsibility. We are more than just a company. We're an integral part of the tapestry of the communities that we serve here in Australia. My experience as a business leader and Board member of various listed and unlisted entities has allowed me to gain a deep experience in value creation, M&A and strategy, technology adoption and investment, digital transformation and organizational change. With your support, I'm fully confident that we'll not only continue to thrive in this dynamic industry but also deliver continued value to our shareholders, employees and the Australian public. I wholeheartedly thank you for your trust and consideration.

Thanks, Rob. And it's an honor and privilege to stand before you today seeking reelection to the Southern Cross Media Board. Over the past 3 years, we have focused on a journey of business transformation, one that has enabled early success with LiSTNR, as we've heard today, as well as reshaping our company with refreshed leadership, evolving culture, technology capabilities and go-to-market strategies. As a member of all of our committees during my first term and now Chair of the People and Culture Committee, I bring to the Board and so that of my fellow directors some complementary skills: firstly, my understanding of technology businesses as Chair of Straker Limited, Nonexecutive Director of Codan Limited and the previous Chair of hipages Limited; secondly, my strategy and M&A experience, which comes from my time as the Global CEO of an education company's Study Group as well as leading ACP Media in New Zealand; thirdly, my exposure to capital markets having been involved in ASX and private equity-owned companies throughout my career; and fourthly, my governance experience not just as a director of Straker and Codan but also on the national board of the Australian Institute of Company Directors. Finally, like my fellow directors, I believe that I have the determination, passion and capacity to assist the team drive growth and shareholder value for Southern Cross Media. Thank you in advance for your support.

Thank you, Carole, Ido and Heith. 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 Listing Rules. And any proxy votes required to be excluded by those requirements have been excluded from the numbers 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 is healthy support for all resolutions. While there might still be some votes to come in today, I thank shareholders for their support to date.

Turning now to questions. First, for shareholders in the room today, if you have a question, please raise your yellow or green card hand, and we will provide you with a microphone so your question can be heard in the room and by others attending the meeting online. Please state your name or the organization you represent before asking your question. Are there any questions from shareholders in the room? Yes, sir.

Thank you, Rob. [ Charles Scotsman ] is my name. The company's Netyard. We are the tenth largest shareholder on register. We've been on the register for probably 5 years. Our first shares we bought are about $9. We know today that even as a result of the ARN Media offer, we're still only at $0.94. I'd be interested to know what the Board collectively believe is the fair value of the share today in Southern Cross Media?

Thank you for that. I think that is a question that, obviously, we need to answer with some precision while we consider the offer that's there for us. You will find that opinions on that will vary, and there is inevitably going to be a range of decisions, a range of value, and that's going to depend on enormous factors like, for example, I'll give you a couple of examples, the future health of advertising markets. As you know, I always say, when you look at our business, you should really think about our share of eyes and ears, and many of those trends are actually perversely healthy. But you have to think about a share of advertising markets as well and the size of those markets. And you will find varying views on how rapidly those markets will recover and the scale of that recovery, and that will go to the heart of the value of our company. The other thing I would say, which will produce divergence in the forecast, will be the value that you attribute to our business' ability to create growth. When we referred earlier to the fact that we believe the company is undervalued, and we clearly do currently believe the market undervalues our company, we think the market has a very low attribution to the future potential to create growth. And particularly, you've heard about the LiSTNR platform today and the digitization of our business, we believe that, that will offer us considerable growth in the years ahead. And therefore, you will find a range of opinions on that. So I'm not answering your question directly. I can't put a dollar figure on it. I think it's well above where we are today. And we are undertaking that work with our advisers to really try and establish what that range is because it goes to the core of assessing value for shareholders in the proposal that's been put to us by ARN. I may say one more thing on that. This may be more information than you wanted, but the complexity of considering that proposal is further added, too, by the fact that if you are, as shareholders, being offered shares in ARN in return for your shares in Southern Cross. And without complete reverse due diligence on our part to reassure ourselves of the value of ARN, it's very hard to advise our shareholders on that offer at the moment. So when I refer to the complexities of considering that offer, that is one that goes right to the heart of it, particularly when you consider we are major competitors of each other in the marketplace at the moment. So protocol is in place to try and establish that, with one of the reasons that it is taking us time to do this work. Thank you. Are there any more questions from shareholders in the room? Yes, sir.

Mark Hardy, Hardy Family Trust. A question for John. John, you mentioned that there's a desire in the market to move away from the global platforms such as Facebook and Google. I mean just interested to know what data points you're using to validate those trends.

Yes. Look, a couple of data points. I think the first thing to note is that as we're emerging in the digital audio space, we're clearly competing against Spotify at a global level there. But as we highlighted, Meta and Google, in particular, dominate 2/3 of overall digital revenue, right? In terms of why do we think we're going to grow share, and speaking to so many sitting here in the room today, as we go through consortium discussions, in terms of calendar year 2024, there's absolute desire for the big advertising buying groups to invest more into digital audio and particularly with Australian players. So we're seeing that in the commitment we're seeing next year, but we're also seeing in the growth patterns even for this quarter. We've highlighted that we're growing our digital audio revenues above our peers. But as the CRA reported yesterday, the market is growing by 18%. So the market is growing, and we're growing above that. So we're seeing that. We're seeing us take money away from the large digital players in that space. So we're feeling very comfortable and very confident, and it's replicating what's happened globally. This is not an Australian phenomena. This is a worldwide phenomena.

Are there any more questions from shareholders in the room today? Yes.

[ Greg Ward ], a shareholder. Can you tell us how much we've spent so far from inception 3 years ago on LiSTNR, both in capital setup costs and operating losses subsequently?

Do you have any answer to that?

Yes. Look, in terms of OpEx, CapEx, we've probably spent about $50 million in terms of investment losses to date, $45 million to $50 million of investment losses to date. And in terms of CapEx, it's difficult to apportion CapEx because we're developing data analytics, which we'd be doing whether it's LiSTNR or just audio more generally. I think it's a misnomer to say that we wouldn't be investing in other things if it wasn't for LiSTNR. We're investing in our audio ecosystem that happens to be called LiSTNR. But audio for the entire space is being digitized. So I'd rather not answer the CapEx question. I think it's hard to delineate. What we do know is that CapEx is coming down significantly. It's moved from sort of $30 million, $35 million 3 or 4 years ago, down to $20 million last year, down to $17 million we've guided for this year, and we expect it to continue to trail down as the investment in LiSTNR not doesn't complete but moderates in time.

Yes.

[ Martin ] is my name. I'm a trustee of my superannuation fund. May I ask a question through my adviser here because he knows better how to ask questions.

[ Roger Carbon ], and I also hold 1.2 million shares indirectly for your company. I've been talking to a couple of your ex people. And on the calculations that I do, there's $2.42 in February 2025 with value at an EBITDA multiple of 8. Looking at our shareholders from this merger, they're choosing $20 million buffer opportunity benefit from January 1, assuming the deal gets done, right, holding advertising revenues roughly 0. It's an enormous gain to have this combine occur, enormous gain. And the $2.42 on 489.7 million shares means you creep above the $1 billion mark. And index institutions, small cap, they would have to pile into the register. I encourage the Board to pursue this vigorously. And also in the interim also put in place some further cost reductions in terms of the Board costs. I mean you guys have got $1.156 million, I think it is. Channel 9 has got $1.3 million worth of director cost. They're 9x your size in EBITDA. And I think it's pretty important that this Board gets scaled down to size rather than just talk about how much you took off staff, et cetera, et cetera, during the year. It's up to this Board to reduce its size expenditure to make a demonstration to shareholders you're on our side. On the issues of this merger, 0.753 is a pretty poor ratio given the fact that you've got [ prior capacity to double pay us ] in FM. You've got 55% of the DAB signals that exist. These guys are buying you because this Board and the previous Board, Max Moore-Wilton and Leon Pasternak, completely destroyed the entertainment capability of keeping up the good talent in this company. This important talent is the only thing differentiator you've got. And I say there's 0 media experience in any of the Board members here, except for the man from PBL New Zealand, and that's sort of like Goat Island in Sydney Harbour in relative size and importance terms. So all I can just say is that some of you guys should resign and should be replaced by people who know the entertainment industry, been in the media industry where the only difference in profit performance between competitors is talent. It's a people business, and you need to have some people. There's people floating around our industry. And I think you guys have got to get into it no matter whether this deal goes ahead or not. But more importantly, $2.42 at 8x EBITDA model is something worth pursuing, if it does occur, depends on the revenue markets, obviously, but all things are relative. I hope you get to 1x ARN shares instead of 0.753. And I'll be recommending to my clients, and there's more clients in Melbourne I've got, that if you do proceed with something like this, that it goes ahead. Thank you.

Right. Well, [ Martin ], there's not really a question in there with the greatest of respect. I can respond to some of it. First is, you could save me an awful lot of money on advisers if I just accepted your valuation and moved on because that's essentially the work we're doing now to try and validate that. So I appreciate your view. Well, we still need to do a lot of work, in my view. I understand where you're going with that. We are certainly doing the work with the same intent that you are, which is to try and reassure ourselves that there is value proposition here for our shareholders, and we're trying to maximize that value proposition to respect the direction of what you're saying in that regard. I would make a couple of other comments. We have already made the Board smaller. We didn't replace Melanie Willis when she resigned. We're very mindful of that obligation. We're looking at that going forward. And we understand that a smaller company means we need to operate with lower costs across the board. So I understand that. I would also dispute with respect the level of media expertise around Board table. Carole, for instance, had a period of time working for Channel 7. So yes, there's media expertise there. I think Ido has particular digital media expertise. Glen himself has significant technology expertise, and. Increasingly our business model is moving towards the world of digital and technology-enabled business model. And obviously, John sits on our Board. I think we've got, with respect, considerably more media expertise than you give us credit for. All of that said, your general point is we need to assess the value of this proposal. We need to take it seriously. We need to maximize any potential returns from this or any other proposal for our shareholders, and we intend to do that. That's what we're working on. So we are certainly not in a dismissive or defensive mode, we're genuinely trying to find out what that value is for our shareholders. So I thank you for your observations. Are there any more questions or observations in the room, further questions?

[ Joseph Constable ] here. I have 2 questions. The first is, can you share any indicative time on how long it might take to respond? And the second thing is outside of the complexities and where you end up on the current environment, do you have any views you can share on consolidation in this industry?

Thank you for your questions. It's very early to answer your question on timing. All I will say is the consortium concerned have said that they really hope that an in-principle agreement could be reached by December. When we look at the workload that is required merely to reassure ourselves that this deal is doable, and you consider the regulators and legal perspectives involved in that, we think that is highly optimistic. And frankly, we're not going to be rushed by that view as we try and assess whether there's value here for our shareholders. But we're engaging with genuine intent to discover whether that's the case. But I personally believe that, that time frame is highly optimistic, just looking at the amount of work and the complexity of the proposal. So that probably gives you a feel for that. Media consolidation as a whole, look, I mean, there's no doubt that the media industry has been on a consolidation trend for a long period of time. It is also, as I think I've said before here, probably in the businesses I've worked, the most impacted business by the technological revolution that I think we're living through, that we've ever seen. When I came on this Board, which is now 7 or 8 years ago, it was almost unimaginable that we'd be talking about Apple, Meta, Google as if they're our biggest competitors. But the reality, per share of advertising dollars, they are. They may not be our biggest competitors per share in ears and eyes, but they're still a competitor there as well. They are. So this market has transformed. And it's no doubt that if you look at the regulations which guide this market, that the regulator themselves are really struggling to keep up with that technological change. We are well regulated in press, in outdoor, in TV and in radio, but really, the pace with which the market is moving in the digital environment is beyond the current control and scope of the regulators. So this is a rapidly transforming market. So it's expanding in a sense at the same time that it's consolidating. I think the consolidation trend is likely to continue in traditional media. But to a certain extent, one of the challenges you have to work through as this proposal highlights, is that there are actually quite rigorous regulations in place to try and control the consolidation of the industry. But if you think about it in a macro sense, to compete against what's going on in the digital environment, it is probably necessary not just here but all around the world, in effect. So I think that's going to carry on. But the pace and speed of that will be determined in the months ahead. Are there any more questions in the room? Okay. That doesn't appear to be the case, so I'm now going to ask Rochelle Burbury, our Head of Corporate Communications, to let me know if we've received any additional text questions during the meeting and whether any shareholders wish to ask a verbal question. Rochelle?

Yes, we've got some questions. Our first question is from Stephen Mayne. ARN Media is chaired by Hamish McLennan, who is the News Corp nominated Chair of REA Group. Given his clear historical links to the Murdochs, surely, it is untenable to engage with ARN at any level until ARN Media is led by a genuinely independent chairman, particularly given that Lachlan Murdoch publicly owns the competing Nova business, and News Corp is one of the largest shareholders in ARN Media. Have we engaged with ACMA on any of these matters, particularly given the 2 radio license limit in capital cities?

Thank you, Stephen. I think really, in fairness, that question should be directed to ARN and Hamish. We are here to consider a proposal that is made to us on behalf of our shareholders to see whether there is value to add for those shareholders, and we're considering it in that light. I acknowledge the points, but I don't think it's our role to determine whether Hamish is an appropriate representative of that organization, or indeed the ethics and morals of that organization, given that they are regulated by the same bodies as us and are trading in the marketplace currently. So I appreciate the viewpoint. I understand Stephen's viewpoint on that, but our intention is to engage with the consortium to determine whether there is value in this proposal for our shareholders.

We have another question from Stephen Mayne. Have we attempted to recruit Kyle and Jackie O? And does the CEO and Chair believe the ARN Media bid is partly driven by the contract negotiations with Kyle and Jackie O and our interest in poaching them?

Yes. We won't comment on the speculation. There's clearly been speculation in the press. We read it. We won't comment on that. It's for a matter that ARN should choose whether they need to divulge the terms on which they employ Kyle and Jackie O. They're clearly going to be a very expensive act. But we're not going to comment on that speculation. It's really for ARN to comment on.

Another question from Stephen Mayne. Could Carole Campbell comment on whether she felt comfortable with the anti-voice file pumped out night after night on our regional television stations by the nasty right wingers who populate Sky after dark? Did we as a company take a position on the voice? If not, why not?

Would you prefer to answer that, Rob?