Southern Cross Media Group has delivered its first full-year result as the enlarged media group, but the numbers underline just how much work remains to turn the merger with Seven West Media into a consistently profitable business.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
The group reported pro forma gross revenue of $1.87 billion for FY26, down 4.5% on the prior year, while net profit after tax more than halved to $9.9 million from $23.3 million.
The headline earnings figure masks a much wider split inside the business. Southern Cross Media’s audio operations continued to grow and remain highly profitable, while the television business was hit by a sharp contraction in advertising and a corresponding fall in earnings.
That leaves the company increasingly dependent on cost reductions, audience share gains and digital growth to offset a television advertising market that remains under pressure.
CEO Rohan Lund, who took over in May, acknowledged the difficulty of the result, saying it had been “a tough year” while making clear that efficiency would remain a major focus.
The company has now launched a substantially larger savings program targeting $145 million to $150 million of annualised savings. Lund says the cost saving program should not be viewed as the end of the group’s efforts to reduce its cost base, raising the prospect of further restructuring and job losses after at least 250 positions were already cut.
Television revenue fell 6.6% to $1.25 billion. Audience share gains have also not been enough to prevent a significant decline in advertising dollars.
The group said advertisers pulled $125 million from the Seven television network during the year, with $41 million of that decline offset by the network increasing its share of the audience.
Television digital revenue increased 10.6%, while 7plus continued to strengthen its audience share. The company also expects television revenue to be flat so far in FY27, with the Commonwealth Games and AFL broadcast rights helping offset a mid-single-digit decline in the broader market, providing some near-term support, but without removing the underlying advertising challenge.
The contrast with audio is stark. Audio revenue increased 1.4% to $429.9 million, while EBITDA climbed 15.5% to $100.4 million. That delivered a 23.4% EBITDA margin, well above television’s 8.8%.
Digital growth is also occurring across the business. Group digital revenue reached $320.3 million, up 10.7%, while television digital revenue increased 10.6% and audio digital revenue rose 14.3%.
Publishing remains weaker, with revenue down 3.1% to $187 million and EBITDA of $26.2 million, although publishing digital revenue still grew 5.7%.
That leaves Southern Cross with three distinctly different businesses: a television operation facing a structurally difficult advertising market, an audio business producing stronger growth and margins, and a publishing operation that is declining but continuing to build its digital component.
Management has already cut at least 250 staff, and Lund’s comments indicate the restructuring is not finished, suggesting investors should expect further pressure on headcount and operating structures as the company attempts to close the gap between its revenue base and its cost structure.
Net debt stood at $362.8 million at June 30, compared with $357 million a year earlier. The group’s borrowings have now been refinanced into a single $569 million facility, with the first maturities not due until FY30.
Television revenue is reportedly flat so far, helped by the Commonwealth Games and AFL rights, while the broader market remains down by mid to single digits. Audio revenue growth is continuing at low single digits, while publishing is steady. That suggests the immediate outlook is not collapsing, but neither does it point to a rapid recovery in the group’s underlying advertising market.
Join the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.