Prime Media Group Limited (PRT) is a regional Australian television broadcasting and online media company. A recent market update highlighted the issues facing regional advertising. The CEO announced a 6.9% decline in advertising revenue compared with the same period last year. Revenue was expected to be flat to slightly lower, however, the key to maintaining profit is via a cost reduction program. This was not mentioned in the update and in the 2014/2015 financial year prfoit actually rose 5.2% despite falling ad revenue. Since the elevation of Mr Turnbull to PM, the debate around the abolition of the media-reach-rules (Metro stations can only broadcast to 75% of the market) has been re-ignited. If abolished, television networks, radio stations and newspapers will compete on equal footing with un-regulated digital entrants to the marketplace such as Google and Netflix. In the near-term the perceived headwinds will continue to weigh on confidence, however, in the longer-term PRT will trade on fundaments once the market becomes comfortable with earnings resilience. In the meantime, PRT pays a grossed up 17% yield. Newsletter: (VIEW LINK)
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