ARN Media (ASX: A1N) Cuts Debt as Radio Revenue Slides

Owner of KIIS FM, ARN Media reported lower first-half revenue and earnings as weakness in metropolitan radio outweighed cost reductions and digital growth.

Revenue from continuing operations fell 14% to $127.9 million for the six months. On a normalised basis, excluding election advertising and ATN contract effects, revenue declined 10%.

Underlying EBITDA dropped 27% to $18.2 million. Net profit after tax before significant items halved to $4.2 million.

However, free cash flow reached $18.6 million, supported by working-capital management and asset sales. Net debt fell to $49.4 million, down $28.1 million from a year earlier.

Metro Radio Remains the Pressure Point

Metro revenue fell 24% to $60 million, reflecting residual brand-safety impacts and broader advertising-market weakness. Normalised metro revenue was down 20%.

Regional revenue declined 5% to $54.2 million, or 1% on a normalised basis. Digital revenue edged 1% higher to $13.7 million and represented 11% of group revenue.

Digital EBITDA increased 55% to $2.1 million. Live-streaming revenue grew 16%, while data revenue rose 70%.

ARN’s commercial challenge is converting audience reach into advertising revenue. The company recorded a 24.9% metro audience share among people aged 25 to 54.

Its metro radio revenue share was only 18.5%. ARN calculates the 6.4-point gap as a $38.4 million annual revenue opportunity, based on $6 million per share point.

Cost Reductions Cushion the Decline

ARN removed $11.8 million of costs during the half. Cumulative reductions since 2024 reached $42.5 million.

Management remains focused on delivering about $55 million of cumulative savings by 2027. Operating expenditure fell 13% to $84.5 million, despite investment in data, digital products and technology.

The lower cost base only partly offset a $19 million EBITDA impact from reduced revenue. Underlying EBITDA therefore declined by $6.8 million from the prior corresponding period.

Significant items totalled $31.7 million after tax. These included a $25 million intangible-asset impairment and costs connected with litigation and a legal settlement.

The group recorded a statutory net loss after tax of $2.5 million. That compared with an $11.9 million loss in the prior corresponding period.

Balance Sheet and Outlook

Cash increased 72% from December to $17.6 million. Net debt fell 23% during the half, while leverage stood at 1.5 times EBITDA.

ARN had $73 million of undrawn capacity under facilities maturing in December 2028. It also agreed to sell Cody Hong Kong, removing $30 million of parent and bank guarantees.

For the full year, ARN expects the audio advertising market to remain broadly flat, excluding prior-period election revenue. Low single-digit radio declines are expected to be offset by digital growth.

The company expects metro revenue share to improve during the second half. Regional revenue share is expected to remain stable, with continued digital growth.