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Why the Southern Cross Media share price crashed 23% lower today

James Mickleboro
share market bear invest crash

It has been a very disappointing day of trade for the Southern Cross Media Group Ltd (ASX: SXL) share price.

This morning the media company’s shares fell as much as 23% to 88.5 cents.

Why are Southern Cross Media shares crashing lower?

Investors have been heading to the exits in their droves today after the media company released a trading update.

According to the release, media markets have been weak during the first quarter. As a result, its revenue for the quarter ended September 30 was down 8.5% on the prior corresponding period. This was driven by declines in both its audio and television segments.

One small positive is that management advised that it believes it has consolidated the advertising share gains achieved in the prior corresponding period and is currently trading in line with media markets.

Another positive was that its first quarter operating costs were $1 million below the prior comparable period. This includes one-off restructuring costs of $1.5 million related to the outsourcing of transmission services.

Management advised that cost discipline remains a core focus. A series of actions have been taken to mitigate full year costs in response to adverse market conditions. The majority of these savings will be realised in the second half.

EBITDA for the first half is expected to be in the range of $60 million to $68 million, before adjustments for AASB1. This compares to its underlying EBITDA of $82.9 million in the first half of FY 2019.

Looking ahead, management tried to ease the concerns of shareholders by reminding them that advertising markets remain short and volatile. In the meantime, Southern Cross Media will continue to focus on maximising its market share while maintaining strict cost control across all divisions.

This news has weighed heavily on the shares of rivals Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven West Media Ltd (ASX: SWM). They are down 5.5% and 3.5%, respectively, in late morning trade.

The post Why the Southern Cross Media share price crashed 23% lower today appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019