Southern Cross Media shares rally on TV divestment
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More news: Southern Cross Media Group shares rallied after it announced it would sell its remaining television licences to Seven West Media.
Its shares were up 6.47% to 74 cents by afternoon trading but have dropped 22.92% over the last 12 months. Meanwhile, Seven shares were flat.
Southern Cross also said it would resume dividends due to an improvement in financial performance.
Southern Cross divests TV assets to Seven, set to resume dividends
The news: Southern Cross Austereo has agreed to sell its remaining television licences and associated assets to broadcaster Seven West Media, and flagged a resumption of dividends amid an improved financial performance.
The numbers: The company will divest its TV licences and associated assets in Tasmania, Darwin, Spencer Gulf, Broken Hill, Mt Isa and remote, central and eastern Australia to Seven for $3.75 million. These licences broadcast the Seven Network television signal under an ongoing affiliation agreement.
SCA also outlined strong operating momentum in the first four months of the year, with audio revenues up 9% from the previous corresponding period. It said cost-out initiatives across the business will result in non-revenue related costs being $5 million lower than the FY24 base.
The context: SCA said it will apply the sale proceeds towards reducing net debt, while Seven West said in a separate statement the transaction will be immediately earnings accretive in FY26.
Southern Cross said the improved financial performance will mean that the group’s leverage ratio is forecast to be below 1.5x at 30 June. “Additionally, with the elimination of earnings uncertainty from the disposal of TV assets, and the reset audio and capital base, the board’s current intention is to resume dividends with a final dividend for FY25,” the company said in a statement.
