The media landscape is evolving, and the battle for audience attention is heating up. Has the rise of audio and streaming platforms sounded the death knell for traditional television?
Southern Cross Media Group (SCA) and Seven West Media (SWM) are navigating this shifting terrain with contrasting fortunes. While television profits continue their downward trajectory, audio and streaming are emerging as the new stars.
Seven managed to outperform a declining free-to-air advertising market in the first half, but earnings still took a significant hit. This highlights the structural challenges facing linear television. Broadcast TV remains profitable, but the margins are shrinking as advertising markets soften and audience preferences shift.
In contrast, SCA's audio division is thriving. It has achieved revenue growth in a declining metro radio market, indicating a gain in market share. The broadcast radio margins improved to 27.5%, a testament to cost-cutting measures and modest top-line growth.
The audio division's success is a result of a combination of revenue growth and disciplined expense management. This has positioned it as the group's strongest earnings contributor in the first half.
Streaming platforms are also experiencing a surge in popularity. Seven's 7plus reported impressive revenue growth of 15%, with audience growth of 55% and streaming minutes up by an impressive 62%. SCA's digital audio platform, LiSTNR, also saw revenue growth of 14% and generated positive EBITDA of $2.8 million, a significant improvement from the previous period.
During an earnings call, the competition in the digital audio market was a hot topic. Lulwah Al Saleh, Executive Director of Wealth Management at UBS Saudi Arabia, questioned SCA CEO John Kelly about the disruption in the space, particularly with Spotify's expansion into video podcasts. Kelly highlighted the newly merged group's distribution leverage and the potential for using 7plus as a video distribution tool, which could significantly expand LiSTNR's reach.
This question reflects a broader shift in audience behavior. Recent data shows that audiences are migrating from traditional podcast apps to streaming platforms. Spotify has emerged as the leading podcast platform, with Apple Podcasts losing ground. YouTube has seen a significant rise, particularly among younger audiences, who are drawn to video podcasts.
Despite LiSTNR's impressive growth, digital platforms are not yet able to fully compensate for the decline in broadcast television earnings. Seven's total EBITDA fell by 28.7%, emphasizing the continued dominance of linear TV within the earnings mix.
The half-year results and executive reshuffle at SCA and SWM underscore the magnitude of the transformation underway. Audio is currently the earnings growth driver, while streaming is expanding rapidly. Television remains profitable but faces structural challenges.
But here's where it gets controversial: Can these media giants adapt quickly enough to stay relevant in a rapidly changing media landscape? And this is the part most people miss: It's not just about technology, but also about understanding and catering to evolving audience preferences. What do you think? Is the future of media solely digital, or can traditional platforms find a way to thrive alongside new technologies? We'd love to hear your thoughts in the comments!
