A Glance at 4 Media Stocks – News Corp, Nine Entertainment, Seven West Media, Southern Cross

Digital transformation has rapidly & significantly changed the entertainment & media industry. The consumers are demanding for new innovations in these segments, this includes the big screen, interactive gaming, e-books and e-sports, music streaming, live events, etc.

The substantial rise of digital media content has led to the subsequent decline of newspapers and magazines. This is happening not only in the Aussie media industry but all over the world.

Meanwhile, the BSA ACT or Broadcasting Services Act 1992 outlines the regulations for the conventional tv and radio broadcasting space in Australian region, and also forms the provisions for regulating portion in the internet space.

It also gives powers to the ACMA or Australian Communications and Media Authority for regulating and observing the broadcasting sector. ACMA develops co-regulatory codes of practice for the FTA or free-to-air commercial and community tv and radio space and outlines the rules for the subscription in both tv and radio industry.

Further, print news media has made self-regulatory standards for practicing it. The Australian Press Council is the main body that sees to the grievances against Australian newspapers and associated digital outlets.

News Corporation (ASX: NWS)

Subdued Second Quarter 2020 Results:

News Corporation (ASX: NWS) that owns 100% in Australian News Channel Pty Ltd operated by Sky News Australia, which is a 24-hour multi-channel, multi-platform news service.

As per the company’s release dated 7 February 2020, NWS for the second quarter this year has reported 6% decline in the total revenue to $2.48 billion compared to the prior year period. This decline is on back of 2 percent adverse effect due to overseas currency variations, subdued environment faced by the Book Publishing section, low subscription revenues at Foxtel, low print associated advertising revenues at the News and Information Services section and negative pressure at REA Group driven by the difficulties in the Australian housing market.

However, these falls were partly offset by the increase in the circulation and subscription revenue at the News and Information Services division. As a result, for the second quarter 2020, the net income fell 13% to $103 million and 4% decrease in the Total Segment EBITDA to $355 million.

Further, during the first half 2020, the company has posted decrease in the net cash provided by operating activities to $192 million from $358 million in the prior year period. The company during 1H 2020 has generated the free cash flow of $(96) million versus $26 million in the previous corresponding period.

Moreover, by next month this year, Foxtel and some of its subsidiaries have signed a subordinated shareholder loan facility deal with Telstra (that holds a 35% interest in Foxtel).

As per this agreement, Telstra will offer Foxtel ~$170 million to be utilised for financing the cable transmission costs as per a services arrangement amid the companies- Foxtel and Telstra.

Segment Performance in 2Q 2020 (Source: Company’s Report)

On 10 February 2020, NWS last traded at $21.660, declining by 0.733% from its last close. Meanwhile, NWS stock has risen 6.75% in three months as on February 7th, 2020.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

Subdued 2020 Outlook:

Nine Entertainment Co Holdings Ltd (ASX: NEC) is a leading media company that caters to TV, radio, newspaper publications and digital media related with News, Sport, Lifestyle and Entertainment. The company controls renowned streaming service Stan.

The company for FY 20, expects Pro Forma Group EBITDA to post low single digit growth on the back of decline in Metro FTA market in mid-single digits. The forecast reflects the weak consumer demand in various consumer facing businesses, and general subdued environment in the overall advertising market.

On 10 February 2020, NEC last traded at $1.850, falling down by 0.538 percent compared to its last close. Meanwhile, NEC stock has risen 0.54% in three months as on February 7th, 2020, has an annual dividend yield of 5.38% and traded at a P/E multiple of 10.64x.

Seven West Media Ltd (ASX: SWM)

Proposed merger of Seven and Prime has been terminated:

Seven West Media Ltd (ASX: SWM) was formed after acquiring West Australian Newspapers Holdings Limited (WAN) caters to free to air television broadcasting, publishing of newspaper and magazine, online and radio services, a subscription video on demand service (Presto TV) & and RED Live.

The company will not acquire 14.9% stake in Prime Media Group after the company did not get requisite vote of Prime shareholders, who did not approve the proposed merger of Seven and Prime.

On 10 February 2020, SWM last traded flat at $0.245. SWM stock has fallen 46.15% in the last three months as on February 7th, 2020.

Southern Cross Media Group Ltd (ASX: SXL)

Refinanced the debt facilities for further 3 years to January 2023:

Southern Cross Media Group Ltd (ASX: SXL) formerly known as Macquarie Media Group, is one of Australia's major diversified media company that is into operation of regional radio and television stations in Australia, and also is into publishing of community newspapers in the United States.

SXL has recently refinanced its syndicated debt facility for a further three years till January 2023. As per the new arrangement, the company got 3 year revolving $435m debt facility and a 1 year revolving $25 million debt facility, which the company will use for the repayment of the existing drawn debt of $325m and will also give the company financial flexibility to underpin the growth of the business.

On 10 February 2020, SXL last traded at $0.82, declining by 1.796 percent from its previous close. Meanwhile SXL stock has fallen 7.73% in three months as on February 7th, 2020 and has a strong dividend yield of 9.28%.

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