Southern Cross Media Group’s FY26 results reveal a 4.5% revenue drop amid a soft advertising market, but $30 million in merger synergies delivered a year early and digital revenue growth offer a silver lining.
- FY26 revenue down 4.5% to $1.87 billion
- EBITDA down 12.8% to $200 million including onerous contracts
- Merger synergies of $30 million delivered early, $145-$150 million cost savings program launched
- Digital revenue up 11%, with audio digital growth outpacing broadcast decline
- Net debt refinanced into $569 million facility maturing in FY30
Revenue Decline Amid Tough Advertising Market
Southern Cross Media Group (ASX:SXL) reported a 4.5% decline in pro forma revenue to $1.87 billion for FY26, reflecting a challenging advertising environment. The television advertising market contracted nearly 10%, while metro radio shrank by 6.8%. Despite these headwinds, Southern Cross clawed back $41 million through share gains across its broadcast and digital platforms.
EBITDA fell 12.8% to $200 million including an $8.1 million release from onerous contract provisions, with margins compressing 1.4 percentage points to 10.3%. Net profit after tax halved to $9.9 million, weighed down by $43.2 million in significant items related to merger and restructuring costs.
Merger Synergies Delivered Early, Cost Program Underway
The merger with Seven West Media, completed in January 2026, has begun to reshape Southern Cross’s cost base. The company announced $30 million in annualised merger synergies delivered a full year ahead of schedule and launched a broader cost reduction program targeting $145 to $150 million in annual savings, with most expected by the end of FY27.
Southern Cross also refinanced its debt into a single $569 million syndicated facility, replacing separate SCA and SWM borrowings. The new facility has maturities spread across three and four years, with no maturities until July 2029, providing the group with financial flexibility amid volatile market conditions.
Digital Growth and Market Leadership in Core Divisions
Digital revenue increased 11% to $320 million, driven by strong performances from 7plus streaming, LiSTNR digital audio, and The Nightly digital news platform. Notably, digital audio revenue growth outpaced declines in traditional broadcast revenue for the first time, highlighting a pivotal shift in consumption patterns.
Southern Cross retained its position as Australia’s leading media company by reach, with the Seven Network achieving a record 42.5% audience share outside an Olympics year and 7plus becoming the fastest-growing BVOD service with a 42.2% audience share. The Hit and Triple M radio networks increased metro revenue share to 30%, with Triple M ranked #1 for men 25-54 and Hit Network #1 for women in the same demographic.
Publishing revenues declined 3.1%, reflecting print advertising softness, but digital growth in The West Australian and The Nightly partially offset this. The West Australian’s monthly audience grew 8.1% to 3.5 million, maintaining its status as the top digital news source in Western Australia.
Cash Flow and Balance Sheet Highlights
Cash flow available for debt service halved to $41 million, impacted by working capital movements and non-cash onerous contract items. Capital expenditure was reduced by 22.5% to $27.5 million, focusing on digital assets and broadcast equipment.
Net debt was contained to $362.8 million, up slightly from FY25, with reported leverage rising to 1.8 times EBITDA. The company’s refinancing and cost discipline aim to support stability going forward.
Outlook and Near-Term Trading
Southern Cross’s FY27 Q1 trading update showed television revenue tracking flat year-on-year, aided by share gains from major sporting events like the Commonwealth Games and AFL finals despite a mid-single-digit market decline. Audio revenue grew low single digits, while publishing remained stable.
The company flagged ongoing volatility in the advertising market, with consumer and advertiser sentiment remaining cautious. Operating expenses are expected to grow below inflation, with the cost reduction program on track and one-off costs anticipated for major sporting events.
Southern Cross’s leadership under CEO Rohan Lund emphasises leveraging its multiplatform assets, trusted content, and data capabilities to navigate the evolving media landscape and deliver shareholder value.
Bottom Line?
Southern Cross Media faces a volatile ad market but is leveraging merger scale, digital growth, and cost discipline to stabilise and position for growth.
Questions in the middle?
- How effectively will Southern Cross convert its digital audience growth into sustained revenue gains?
- Can the company fully realise its $145-$150 million cost savings without impairing content quality or audience engagement?
- What impact will continuing advertising market softness have on Southern Cross’s revenue and margin trajectory in FY27 and beyond?