Southern Cross Media Group Ltd (ASX: SXL) is an Australian broadcaster with regional TV and metropolitan and regional radio assets. Its national broadcasting reach is about 95%. Historically regional television and radio are relatively stable, moderate growth markets. In weak advertising markets, metropolitan radio is also relatively resilient but more prone to competition. Primary TV affiliation is with Ten Network Holdings Limited (ASX: TEN). Both companies aim to differentiate from competitors by serving the younger demographic.
Southern Cross Media Group engages in the creation and broadcasting of content on free-to-air FM and digital commercial radio, TV, and online media platforms in Australia. The company’s radio networks deliver entertainment, music, sport, comedy, and big events; and TV stations offer various markets local news updates and community announcements. Southern Cross Media Group owns 78 radio stations; and 19 regional free-to-air television licenses. It also owns approximately 80 websites that serve approximately 1,000,000 clients. Overall, it serves approximately 8.34 million radio and TV subscribers.
Southern Cross Media Group is tightly held. Its top five shareholders are well-known banks or nominee companies of these banks. They hold 76% of its shares. The P/E is a very attractive 8.2 times. Dividend yield is 8.6% fully franked. Earnings per share for the year ending June 2013 were 14.3 cents. Operating margin has held up at over 30% for each of the last four years, compared with the Ten Network, which has experienced a dramatic fall in margins over the same period from 16.8% to 6.4%. Therefore, compared to the Ten Network, Southern Cross has demonstrated a much more sustainable business, which points to a better choice of investment.
As the current price is near its historic low point at $1.08, this company’s shares are offering a high dividend relative to other companies in the S&P / ASX 200 Index (ASX: XJO), with a bright future too.
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Motley Fool contributor Chris Koenig does not have shares in the companies mentioned.