ARN Media (ASX:A1N) outlined a “year of transformation” in its FY25 full-year results presentation, pointing to a reset cost base, a strengthened balance sheet, and a strategy to diversify revenue toward digital audio, video, and social content.
Chief Executive Officer Michael Stephenson said the company had simplified its organizational structure, improved systems and processes, and implemented new ways of working to create a more efficient operating model. He added that ARN has invested in digital capability and placed iHeart “at the very center” of the organization, while also emphasizing strong performance in regional markets.
FY25 results: lower revenue, strong cash generation
Chief Financial Officer Alexis Poole said the business faced a more challenging external backdrop, but delivered “disciplined execution.” Poole reported that operating costs fell 4% to AUD 187 million; excluding reinvestments in content and capability, this represented a 12% underlying reduction. Net profit after tax was AUD 16 million, down 41%, which Poole attributed to revenue headwinds and investment aimed at repositioning the business for sustainable growth.
Poole highlighted cash performance as a key feature of the year. Free cash flow increased 6% to AUD 40 million, with operating cash flow conversion of 108% and free cash conversion of 234%. Poole said this cash discipline enabled ARN to reduce net debt to AUD 64 million and refinance facilities in December, extending debt maturity by three years.
Portfolio changes and discontinued operations
Poole noted that during FY25 ARN made the strategic decision to dispose of its Motive investment and divest Cody Hong Kong. As a result, both businesses were classified as discontinued operations in the financial statements. The company also completed a review of revenue recognition, with income restated to align with AASB 15 requirements.
In the Q&A, Stephenson said divesting Cody Hong Kong remained “a major priority,” describing it as the most significant asset in the divestment program. He said management and advisers had been spending time in Hong Kong working with prospective purchasers and that “a number of options” were on the table, though there was “no update at this stage” on timing.
Separately, Poole addressed a question about a AUD 47 million provision in Cody Outdoor, saying ARN worked closely with auditors under AASB 5 and that the provision included a potential outcome of a sale as well as the ongoing trading results of Hong Kong.
Cost-out program and productivity focus
Management said it has “structurally reset” the cost base while continuing to reinvest selectively. Poole said AUD 24 million of costs were removed during FY25 and AUD 15 million was deliberately reinvested into talent, technology, and digital capability.
Stephenson said ARN has realized AUD 31 million in structural cost-out and identified AUD 55 million in total cost-out to be delivered by the end of 2027, ahead of a previously stated target of AUD 40 million. Poole added that over the past 18 months, ARN delivered AUD 31 million of savings and increased the total cost savings target to AUD 55 million over the 2024–2027 period. She also said the company had actioned AUD 16 million of initiatives expected to deliver savings in FY26 and FY27.
Poole said the company is also pursuing productivity improvements through automation and the “responsible use of AI,” including AI training for employees and deployment of AI across operations, with an aim to avoid “future AI technical debt.”
Digital mix, iHeart renewal, and data strategy
Poole said ARN’s revenue mix is improving, “led by profitable digital growth and our resilient regional business.” While metro broadcast revenue declined, regional revenue fell just 1%, supported by audiences and local sales execution. Poole said metro revenue declined 16% in FY25.
Digital revenue represented 10% of group revenue, and digital audio revenue reached AUD 27 million, up 7%, driven by a doubling of live streaming revenue. Poole said digital growth occurred despite a podcast revenue decline following a deliberate exit from low-margin third-party agreements with minimum revenue guarantees. She described the decision as a conscious trade-off to improve earnings, prioritize content ownership, reinvest in ARN-owned podcasts, and integrate more deeply with the iHeart ecosystem.
Stephenson said ARN renewed its long-term partnership with iHeart for a further 10 years, calling iHeart “the world’s largest free streaming platform.” He said the agreement provides access to global product and development teams without “onerous capital cost,” and that ARN is leveraging iHeart commercial products and partnerships to accelerate innovation in Australia in audio and “now in video.”
On data, Stephenson said ARN is building a first-party data asset to improve monetization of digital audiences. He said ARN has signed partnerships with Westpac, Experian, and Azira to enrich audience segments, built 800 advertiser segments, and launched attribution reporting that links advertising on iHeart to store visits or other business outcomes. He said ARN plans to complete implementation of a data lakehouse, implement a customer data platform, and expand clean rooms for audience matching.
Outlook and strategic priorities
Stephenson reiterated ARN’s strategy to shift from a traditional radio business to an “entertainment company” spanning audio, video, social, and live experiences, with a focus on creating content once and distributing it across platforms to generate multiple revenue streams. He also outlined plans to extend existing radio and podcast assets into video formats, using current studios and technology “with no incremental cost.”
For FY26, management expects the total audio market to be broadly flat, with low single-digit declines in radio offset by digital growth. Stephenson said ARN expects metro radio share to improve through the year, regional share to be broadly flat, and digital revenues to grow in the “mid-teens.”
In Q&A, Stephenson attributed FY25 metro share declines to a combination of market conditions and a transitional period during the business transformation, including changes to commercial teams. He said brand safety initiatives—implemented to meet community standards, regulatory requirements, and advertiser expectations—remain his top priority and are expected to support improved outcomes over time.
Stephenson also confirmed the board made a “strategic decision” to hold dividends during the period while ARN progresses the divestment of non-core assets, including Cody Hong Kong.
About ARN Media (ASX:A1N)
ARN Media Limited, together with its subsidiaries, operates as a media and entertainment company in Australia and Hong Kong. The company operates through Australian Radio Network, HK Outdoor, and Investments segments. It owns and operates Australian Radio Network under the KIIS, Pure Gold, iHeartRadio, iHeartPodcast, and CADA brands. The company engages in audio and digital businesses. It operates a network of outdoor advertising panels across Hong Kong tunnels, as well as provides mobile messaging technology services.
