Big bets on Southern Cross media

Seven West Media’s share price has staged an improvement, closing at 8.8c and taking its market value to $138m.

A 27 per cent rally in the share price of Southern Cross Media got some attention on Wednesday.

The surge could be a bet by investors that some media law changes that would boost its performance are on the way.

There’s increasing recognition that Australian mainstream media companies are being hit hard by digital disruption from technology giants such as Google and Facebook.

Another theory is that after a major sell-off in the stock, investors had started to see it as undervalued.

But there’s no evidence that corporate activity is afoot.

Last month, Southern Cross, which operates a regional television and radio network, launched a $169m equity raising at a heavily discounted 9c per share to help reduce its $330.5m worth of debt.

Its market value fell as low as $290m as investors grew nervous about the sharp fall in advertising revenue during the coronavirus pandemic.

Now it is worth $489m and its shares on Wednesday closed 5c higher at 23.5c.

Media stocks have been some of the hardest hit during the COVID-19 pandemic as investors grow nervous about the impact on advertising sales.

Another company in the sector prompted to stage an emergency equity raising was billboard operator oOh!media, which asked investors for $167m to reduce its $354.5m debt.

The raising was at 53c a share.

After its shares hit a low of 59c, they have recovered to $1.10, with its market value at $663m.

Even Seven West Media’s share price has staged an improvement, closing at 8.8c and taking its market value to $138m.

The free-to-air broadcaster attracted a great deal of focus because it has debts of $569.5m.

Seven West has been working with Grant Samuel to assess options.

The group recently sold its Perth-based Osborne Park property that houses its West Australian and Sunday Times newspapers to assist with driving down debt.

Local investor Primewest purchased the site for $75m.