Investment Matters

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).