Company news: Southern Cross Media
Southern Cross Media announced a 20 year contract with Australia Traffic Network, for the provision of traffic report (in conjunction with advertising tags). Southern Cross will receive $100m upfront, and annual payments. We view this deal favourably, as it will further reduce Southern Cross' debt and it provides a certain revenue stream over the long term. Southern Cross is now conservatively geared, and offers a minimum 7.9% yield (including franking). Furthermore, it provides opportunity for growth as ratings improve (and may be a potential takeover target depending on regulatory changes, but this is not our reason for owning it).