Southern Cross Broadcasting reported a good profit last week but 2UE remains an underperforming asset, its problems shielded by the broader advertising boom which saw the television division save the day.

It’s a pity Mark Westfield is no longer at The Australian. His analysis of what appears to be an okay result from Southern Cross Broadcasting would have provided a different take on what was reasonably good publicity for the company in Rupert’s national daily as you can see here.

Westfield looked beyond the numbers to the background, especially in the acquisition of Sydney radio Station 2UE for a reported $90 million three years ago and then lost top rating talk-back host Alan Jones to rival 2GB, which has since pinched much of 2UE’s market.

This is how Crikey reported some of the goings on at SBC and 2UE last year: http://www.crikey.com.au/media/2003/09/05-0007.html.

Since then the share price has recovered strongly as fears of further earnings problems and ratings losses at 2UE have disappeared. But perhaps the biggest contributor to the improved share price and earnings (up 30% in this week’s report to an EBIT of $64.22 million) was the sharp jump in ad revenue that spilled over into SBC’s regional markets and especially into Adelaide’s NWS 9 station. This has helped SBC ride the revenue boom, more so than the sharp improvement (from a low base) in radio earnings.

SBC has extended CEO Tony “Slasher” Bell’s contract to 2009, which is a bit heroic. But seeing as contract extension is the new big thing in business (witness Qantas’ Geoff Dixon and Woolworths’ Roger Corbett getting to go around again, despite being in their 60’s and due for retirement), the move at Southern Cross is just another in what could be a corporate fad.

Mark Westfield used to reserve special scorn for Bell over the 2UE purchase and the departure of Jones, who, whatever you might think of his politics and other traits, is an enormous radio talent and great generator of income for the owners (of which he is now a part owner of 2GB).

This is what Bell said in the profit announcement about 2UE’s performance. “There was a marginal improvement in trading over the past 12 months.” Hardly the stuff to break out the bubbly for, is it? Contrast those comments to these about 3AW in Melbourne, “3AW performed exceptionally well”.

And there were similar glowing comments about the 4BC/4BH partnership in Brisbane Check out the full SBC announcement here.

Radio earned $13.48 million in the year to June, up from the very low $7.95 million. On an EBIT level, television earned $69.9 million compared to $58 million a year earlier.

If you look at the margins, the TV margin rose to a healthy 23.7%. Not Nine, Ten or even Seven levels, but a very good result nevertheless. Radio improved a return of 14.7% from only 9.6% a year ago. Obviously the poor trading results at 2UE are being supported by the returns from Melbourne and Brisbane.

So it’s a wonder how long that can continue? In the present revenue-rich climate, it would be fair to assume for sometime while Bell tries to boost 2UE’s performance, but when the ad boom fades, SBC could be faced with renewed difficulties at 2UE.

There’s an irony here. A few years ago when SBC took over NWS 9 in Adelaide in a $100 million deal after out-bidding PBL, Bell moved in and sacked well over half the staff, earning him the admiration of the Packer family who urged the same sort of approach on the managers of their Nine network stations.

There was talk that David Leckie, then CEO of the Nine Network, would be replaced by Bell. But then reports started coming in from Adelaide of the underperformance of Nine in Adelaide and how it was trying hard to compete with no resources. Slowly but surely staff numbers have risen as Seven and Ten have proved to be tougher competitors there than in Melbourne or Brisbane.

The irony is that Tony Bell has probably been saved by the advertising boom, especially that driven from Sydney by the Nine Network (which hasn’t been backward in levying network affiliation fees on Adelaide and the Perth station owned by Sunraysia).

Getting rid of him in the future is obviously not an option after the re-signing by the board led by the former Herald and Weekly Times Chief and Woolworths’ Chairman, John Dahlsen.

A Mark Westfield commentary on this latest result would have been a rip-roaring read. But not for Bell or Dahlsen! Bell got so fed up with the Westfield attacks that he finally sued for defamation but this was mysteriously dropped once The Australian let Westfield go.