Reports said that as a result of the apparent suicide of Jacinta Saldanha, the nurse who answered the prank call from DJs Mel Greig and Michael Christian and gave medical details, shares of the Southern Cross plummeted up to 8.1 per cent on Monday while the radio station is losing $100,000 a day in foregone advertising revenue.
Shares of the company closed 6.5 cents lower at $1.05 on Monday, while the station management estimates total advertising income losses so far at $1 million a week.
Telstra and Coles had pulled out their adverts from 2Day FM, Woolworths and Optus are also planning similar sanctions, prompting the radio station to suspend advertising indefinitely on Saturday afternoon as the public backlash over the incident intensified.
Max Moore-Wilton, chairman of Southern Cross, convened an emergency board meeting of the company on Monday to tackle the advertising loss. 2Day Fm and DMG Radio Australia are earning millions of dollars in advertising revenue based on the formula of a mixture of rock music and gotcha calls.
In the case of 2Day FM, its breakfast segment used to earn $70,000 a day in advertising, estimated Ben Willee, general manager of Spinach advertising agency and a former media buyer.
The incident has prompted DMG Radio Australia, one of Southern Cross's competitors, to ban gotcha call, but media consultant Peter Cox believes 2Day FM would not likely change its format because of the publicity caused by the royal prank call.
Besides 2Day FM, Southern Cross also owners regional TV channels and reported in 2011 s revenue of $687 million, up from 2010's $493 million income.
It is not the first fallout for radio stations. In October, another station suffered also advertising loss after shock jock Alan Jones said the death of the father of Prime Minister Julia Gillard was over shame due to his daughter's actions as head of state.
The Federal Privacy Commission said it would not conduct a formal probe of the 2Day FM incident, but defer to the media regulator, Australian Communications and Media Authority (ACMA), which is reportedly using a rarely used section of the Broadcasting Services Act in response to the incident.
ACMA will cite sections six and nine of the Commercial Radio Code of Practice over unauthorised broadcast of statements by identifiable persons and competitions, stunts and pranks made during live entertainment programmes.
Simon Glenarthur, the chairman of the King Edward VII hospital, where Ms Saldanha used to work, had written to Ms Moore-Wilson to condemn the prank and 2Day FM's actions.