Media companies assess the damage

The coronavirus fallout continues to wreak havoc in the media industry, as Southern Cross Media reviews the damage and oOh!media scrambles to raise capital.

The coronavirus fallout continues to wreak havoc in the media industry, as Southern Cross Media reviews the damage and oOh!media scrambles to raise capital.

Southern Cross, which operates 80-plus radio station s under the Triple M and Hit Networks brands, requested a trading halt on Monday, just days after outdoor advertising group oOh!media’s call for some breathing space.

The company, which swung to a net loss of $120.3m for the six months to December, said the trading halt was necessary to enable it to “assess the impacts of the COVID-19 crisis on its business”, and actions it could take to mitigate the impact.

Southern Cross shares had dropped nearly 33 per cent, or 8c, to 16.5c before the trading halt was announced at lunchtime on Monday, giving it a market capitalisation of $188.4m. The halt will remain in place until Wednesday or when an announcement is released to the market.

oOh!media was understood to be looking to raise between $100m to $200m on the equity markets. If unsuccessful then all options could be on the table, including a fire sale of some assets.

The company, which controls Junkee Media, requested a trading halt last Friday to give it time to meet shareholders and lenders to explore a capital raising.

Departing chief executive Brendan Cook has denied the group has liquidity issues, even though it had net debt of $354.5m at the end of December. He also rejected speculation it was in talks with potential buyers.

The capital raising tilt comes after it was disclosed that US investment management group HMI Capital had raised its stake in oOh!media to 18.6 per cent, two days before the trading halt.

The San Francisco firm, which was established during the financial crisis in 2008, acquired 5.5 million oOh!media shares last Wednesday, according to a substantial shareholding notice lodged with the ASX on Monday morning. Prior to the purchase, HMI held a 16.34 per cent stake in oOh!media.

Several companies in the media sector, including Nine Entertainment, REA Group and Prime Media have abandoned their annual earnings guidance, citing the market uncertainty because of COVID-19.

Advertising spending, which was already down before the coronavirus struck, is expected to fall further as companies retreat during the health and economic crisis to save money.

The public has also been ordered by the federal government to avoid non-essential gatherings of more than 100 people, and strictly adhere to social distancing.

Southern Cross’s interim financial performance was marred by the separation of regional units into audio and TV, which resulted in a one-off non-cash impairment of $226.9m for the six months to December.

Excluding significant items, interim underlying earnings rose 6.1 per cent to $82.9m, with revenue up 0.2 per cent to $335.7m.

Additional reporting: Bridget Carter