Southern Cross Media Group Limited (ASX:SXL) Announces Licence Sale
Strategic Asset Sale
Southern Cross Media Group Limited (ASX: SXL) announced the signing of heads of agreement for the sale of its television licences in three aggregated markets to Network 10. This decision follows SCA’s strategic review of its non-core regional television assets, aimed at improving operational efficiency.
Financial Implications
The sale is expected to deliver an estimated total gross consideration between $15 million and $20 million over a five-year participation period, contingent on advertising market conditions. The net present value at completion is anticipated to range between $10 million and $15 million. SCA will also receive a share of any potential digital dividend if Network 10 surrenders its spectrum to the Government during the participation period.
Operational Transition
Once completed, Network 10 will commence operations over the 3-Agg Market licences. SCA will maintain its local salesforce in these markets and provide advertising sales representation services to Network 10. The agreement with BAI Communications for broadcast transmission services has also been streamlined to support this transition.
Future Outlook
SCA continues to negotiate the sale of other television assets in various regions. The company plans to utilise proceeds from this transaction primarily for reducing its net debt. Tim Young, Chief Financial Officer of SCA, expressed confidence that the sale will lead to a more sustainable earnings outcome moving forward.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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