Southern Cross Austereo (SCA) shares rose about 10 per cent to a nine-month high after the broadcaster presented a cautiously optimistic outlook about the advertising market.
The share price rally came as SCA reported net profit for the six months to December 31 of $45.13 million, which although down 52 per cent from the prior corresponding period was a little better than market expectations.
SCA also flagged full year underlying net profit of between $90 million and $95 million, which was slightly ahead of consensus forecasts.
“Current market sentiment is improving and a long federal election campaign may help revenue opportunities,” SCA said in a slide presentation accompanying the financial results on Tuesday.
SCA soared 9.76 per cent, or 12 cents, to finish at $1.35, the highest close since May 2012.
The fall in first half profit came amid a 10 per cent decline in revenue to $327.68 million, SCA said.
While sales at its metropolitan and regional radio stations fell a combined four per cent in the half, revenue at SCA’s television stations slid 16.6 per cent due to lacklustre ratings at Network Ten, which supplies content to SCA’s television stations.
Despite the difficulties as a result of Ten’s poor performance in 2012 – including the loss of Australian Football League broadcasts – SCA chief executive Rhys Holleran said he remained supportive of Ten.
“TV ratings are challenging, but we believe we are turning the corner and we remain supportive of our supply partner Network Ten,” he said during SCA’s results presentation on Tuesday.
Mr Holleran said he believed Ten’s lineup in 2013 would be stronger than was the case in 2012.
Elsewhere, Mr Holleran said the performance of SCA’s regional radio stations in Queensland suggested a recovery was underway.
“Local advertising markets were positive for the first time in a while and that’s a good sign,” Mr Holleran said.
“If you measure our regional radio business against the broader media market, it is probably a pretty good result and I think it says a lot about our diversified client base and a mix heavily weighted towards local advertising.”
In December, SCA suspended advertising on its 2DayFM station in Sydney amid a public backlash over the radio station’s Duchess of Cambridge prank hospital call.
The incident shaved $2.8 million off first half net profit, SCA’s accounts showed, with any continuing financial impact “immaterial”.
“We have had one of the most difficult 12 months in our history,” Mr Holleran said.
“Despite this, we have produced a result that has met market expectations through rigorous operational management.”
SCA declared an interim dividend of 4.5 cents per share, fully franked.
