Southern Cross Media faces lower revenue as debt and integration demands persist

FY27 Revenue Starts Lower Despite Audience Growth

Southern Cross Media Group Limited (ASX:SXL) is entering its first full year as a combined television, audio, publishing and digital group with a familiar problem: its audiences are growing faster than its revenues. Management told shareholders at the annual general meeting that first-quarter FY27 revenue was lower than the same period a year earlier, as advertising conditions weakened from August and Google news payments fell.

The television market was down by mid-single digits, according to Managing Director and Chief Executive Officer Rohan Lund, with revenue also affected by lower Google payments for news. Commonwealth Games and AFL finals share gains provided only a partial offset. Audio revenue was broadly flat, while publishing revenue declined amid weaker advertising, event scheduling changes and lower Google receipts, partly cushioned by higher circulation and subscription income.

$150 Million Cost Program Moves Ahead of Schedule

The pressure on revenue makes the group’s cost program more than a post-merger housekeeping exercise. Management said the $150 million reduction program is progressing better than expected and that total costs were down year on year in the first quarter, even after absorbing one-off sporting event costs. The full benefit is expected in FY28, and Lund said the company expects to exceed the target.

The program builds on the $30 million merger synergies delivered during FY26, although the year still produced a result below the board’s expectations. Revenue fell to $1.87 billion and EBITDA, including onerous contracts, was $200 million. The presentation showed EBITDA down 12.8%, with a 10.3% margin, while net profit after tax fell to $10 million after significant items of $33 million linked to the merger and restructuring.

Audience Scale Has Yet to Become Earnings Power

That gap between reach and monetisation is the central investment question. The combined group says it reaches more than 20 million Australians each month, with around 16 million registered 7plus users and 2.7 million LiSTNR users. Seven reported total television audience growth of 9.5% year on year at its Upfronts, while the company said 7plus was growing at about 50% year on year.

Radio remains a relative bright spot: the audio business expanded its margin to 23.4%, and metropolitan networks have led the 25-to-54 audience for 42 consecutive surveys. The challenge is converting those audience gains into advertising revenue in a market management described as short and volatile, rather than assuming reach alone will repair earnings.

Integration Strategy Targets Advertiser Buying and Data

Lund’s strategy rests on three practical moves: meeting audiences where they are, making it easier for advertisers to buy and measure campaigns, and reshaping the cost base. The group is developing 7ID to connect audience data across television, streaming and audio, while Phoenix Exchange is intended to create a more integrated trading system across those businesses.

For shareholders, these initiatives remain execution propositions rather than reported financial outcomes. The company says the combination gives advertisers access to a broader national platform, but the FY27 figures show that commercial conversion is still being tested against a soft economy and lower payments from Google.

Debt and Corporate Identity Remain Key AGM Watchpoints

The balance sheet adds another constraint. Net debt stood at $363 million, reported leverage rose to 1.8 times, and the group has a new $569 million syndicated facility. Cash flow available to service debt was $41 million in FY26, according to the presentation. Those figures do not point to an immediate funding crisis in the announcement, but they leave less room for a prolonged advertising downturn while the integration program is still being funded.

The AGM also marks the company’s attempt to settle its post-merger identity. Shareholders are being asked to approve the name Seven Media Group, while the existing Seven, 7plus, 7NEWS, Triple M, Hit, LiSTNR and publishing brands remain unchanged. The board, which now has six independent non-executive directors among eight members, recommended the re-election of Marina Go and opposed a shareholder resolution seeking her removal. The announcement does not state the voting outcomes.