2010 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of Southern Cross Limited (ASX: SXL) with a Buy rating.

Research Analyst Andrew Anagnostellis said “Having changed its corporate structure from a Macquarie Bank triple stapled fund vehicle to single holding company, Southern Cross Media is now a stand alone company focused on Australian regional media. We expect the new corporate structure to increase investor appeal and could result in a re-rating of the stock as investors focus on the company’s leading position in regional media, experienced management and good cost control.”

According to Deutsche Bank, Southern Cross Media has leading positions in regional radio and television markets which have outperformed metro markets over the last ten years, with less volatility. In addition, it is Australia’s only broadcaster that provides a comprehensive integrated advertising platform across radio and television. “The overlap of the regional assets allows the company to leverage best practices and cross promotion opportunities across its television and radio networks as well as achieve cost saving synergies,” said Anagnostellis.

Deutsche Bank believes Southern Cross Media provides exposure to the strong advertising market recovery in television as well as TEN’s ratings gain, given its primary affiliation is with the Ten Network. Downside risks for the company include weakness in the advertising market or ratings, higher affiliation fees and the government not renewing the TV licence fee rebate after FY11.

Southern Cross Media is Australia’s largest regional broadcaster with the ability to reach a potential audience of approximately 7.9 million people, or 96% of Australia’s population outside the mainland capital cities.

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Michelle Chaperon +61 (0) 2 8258 1311