How Is ARN Media Driving Digital Growth Amid Revenue Challenges?
ARN Media reports a 7% revenue decline offset by 21% digital audio growth and $35 million in cost savings, setting the stage for improved profitability and cash flow.
- Total revenue down 7% to $142.3 million
- Digital audio revenue up 21%, now 9% of total
- $35 million of $40 million cost reduction program completed
- Underlying EBITDA down 14% to $24.9 million
- Net debt reduced by $10.9 million to $77.5 million
Strategic Reset in Progress
ARN Media’s half-year results for 2025 reveal a company in the midst of a significant transformation. While total revenue declined by 7% to $142.3 million, this was largely driven by softer performance in traditional Metro and Regional segments. Crucially, the company’s digital audio business grew by a robust 21%, now accounting for 9% of total revenue, highlighting ARN’s pivot towards digital content and platforms.
The leadership team has been refreshed with new appointments including a Chief Operating Officer and Chief Financial Officer, alongside a commercial team restructure. These moves underpin ARN’s ambition to evolve from a traditional broadcaster into a digitally focused audio entertainment business.
Cost Discipline and Cash Flow Strength
ARN has made substantial progress on its $40 million cost reduction program, having already actioned $35 million in savings. This disciplined approach has improved gross margins by two percentage points to 82.8% and contributed to a 30% increase in free cash flow to $19.5 million. The company’s free cash conversion rate of 215% reflects strong working capital management and capex discipline.
Despite a 14% decline in underlying EBITDA to $24.9 million, the improved cash generation and a $10.9 million reduction in net debt to $77.5 million strengthen ARN’s financial position. The company remains committed to shareholder returns, declaring a fully franked interim dividend of 1.2 cents per share, representing 66% of NPAT before significant items.
Digital Leadership and Growth Prospects
ARN’s digital audio platform, iHeartRadio, continues to dominate the Australian market with 3 million registered users and 7 million monthly podcast listeners. The company’s investment in digital audio capabilities is paying off, with margin and EBITDA improvements noted in this segment. The national rollout of the GOLD network further extends ARN’s reach and commercial opportunities.
Meanwhile, ARN’s Cody Outdoor Hong Kong business saw a remarkable 157% revenue increase to $24 million but is now classified as an asset held for sale, with a sale process underway. This divestment aligns with ARN’s strategic focus on its core Australian audio entertainment operations.
Outlook and Market Positioning
Looking ahead, ARN expects a low to mid-single digit revenue decline in the second half of FY25 but anticipates improved commercial performance supported by audience growth and digital momentum. The cost reduction program is set to accelerate, with most savings expected by the end of 2026. The company’s focus on capital discipline and reinvestment in high-impact areas signals a clear path toward sustainable profitability and market leadership in digital audio.
Bottom Line?
ARN’s transformation is gaining traction, but the next phase will test its ability to convert digital momentum into sustained profit growth.
Questions in the middle?
- How will ARN balance ongoing revenue declines in traditional segments with digital growth?
- What impact will the sale of Cody Outdoor Hong Kong have on ARN’s strategic focus and financials?
- Can ARN sustain dividend payments amid continued investment in digital transformation?
