Why Did Southern Cross Media Shares Rise Despite a Sharp EBITDA Drop?

Source: Kapitales Research

Highlights:

• Southern Cross Media Group Limited (ASX: SXL) shares rose 2.3% to $0.67 at the time of writing, as first-half FY26 results from the Seven West Media assets met market guidance.
• The company reported EBITDA of $67 million, down 27%, while revenue slipped 2.1% to $712 million, reflecting ongoing softness in advertising conditions.
• Investors responded positively to the results coming in line with expectations, with attention now shifting to integration benefits and cost efficiencies in the second half of FY26.

Southern Cross Media Group Limited (ASX: SXL) edged higher on Tuesday, with its shares gaining 2.3% to $0.67 at the time of writing, after the company reported first-half FY26 results from its newly acquired Seven West Media assets that came in broadly in line with guidance.

Results Meet Expectations

The market appeared reassured after Southern Cross Media confirmed EBITDA of $67 million, representing a 27% decline compared with the prior period. Revenue for the half came in at $712 million, down 2.1%, reflecting continued pressure across the advertising market.

While the headline numbers showed a clear year-on-year slowdown, investors seemed encouraged that the outcome matched earlier forecasts, reducing fears of a deeper earnings miss.

Why the Market Reacted Positively

Despite the weaker earnings, analysts noted that advertising conditions remain challenging across television and radio, particularly in regional markets. Against this backdrop, Southern Cross Media’s ability to deliver results in line with guidance was seen as a sign of cost discipline and operational stability. At the time of writing, the modest share price rise suggested investors were focusing less on the earnings decline and more on management’s execution following the Seven West Media acquisition, which has reshaped the group’s earnings profile.

Integration and Outlook in Focus

The integration of the newly acquired assets remains a key priority for the company in the second half of FY26. Management has previously highlighted opportunities to extract efficiencies, streamline operations, and strengthen its regional broadcasting footprint over time. Looking ahead, Southern Cross Media’s performance will remain closely tied to advertising demand, which has shown signs of stabilisation but is yet to fully recover. Any improvement in ad spend, particularly from government and national brands, could provide upside in the coming quarters.

For now, investors appear cautiously optimistic that the worst of the earnings pressure may be priced in, explaining why the stock managed to push higher even as profits fell.

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