Money Finance News Seven to ‘sweat assets’ after $445m loss

Seven to ‘sweat assets’ after $445m loss

%%excerpt%% Seven West has reported a $444.5 million full-year loss on the back of another set of massive media-related writedowns.
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Seven West Media aims to wring every drop of value from its traditional media assets after reporting a $444.5 million full-year loss and flagging another drop in earnings for the year ahead.

Chief executive James Warburton, who took charge with last week’s abrupt ending of Tim Worner’s six-year tenure, said Seven had to improve and more effectively monetise its content after again writing down the value of its TV licences and newspapers against a backdrop of weak spending by advertisers.

Underlying profit for 12 months to June 30 was down 7.9 per cent at $129.3 million on the back of a 4.2 per cent fall in revenue, but $542.4 million in impairments among a total $611 million in one-off items dragged the media group to a heavy statutory loss.

Mr Warburton said Seven West was now a “hunter” in mergers and acquisitions but additional value could, in the meantime, be extracted from free-to-air TV network and a stable of newspapers that includes The West Australian and The Sunday Times.

“From a newspapers and magazines perspective … it’s our job to sweat those assets as hard as we possibly can to integrate them as much as we possibly can with the rest of the business,” Mr Warburton said on Tuesday.

In TV, Mr Warburton said Seven would revitalise its scheduling so its marketing team could more effectively monetise content through advertising sales.

“We will revitalise our entertainment programming, creating momentum to engage heartland Australia and enrich the demographic mix, ensuring we are the most relevant and exciting offer to advertisers,” Mr Warburton said.

Mr Warburton, who had a short and ill-fated spell at rival Ten before happier stints in charge of Supercars and APN Outdoor, said his aim was for Seven West to become a “sales-led organisation”.

With only five days in charge, he did not give any detail about what avenues he would explore when it came to Seven West’s possible diversification plans, but stressed that nothing was off the table.

“We have incredibly strong assets, and our focus moving forward is to speed up the rate of transformation while exploring opportunities for growth in our core and adjacent markets,” Mr Warburton said.

“We will be a hunter and explore M&A opportunities in both traditional media and non-traditional adjacencies that are positive for our shareholders.”

With Disney having announced a November launch for its on-demand streaming service, Mr Warburton said the arrival of international media services could offer opportunities for partnerships.

Seven Studios, which licences Seven shows and has production and co-production deals with platforms including Netflix, lifted its full-year earnings 5.3 per cent to $59 million.

Seven West had already warned of lower full-year underlying earnings because of a softer advertising market and on Tuesday confirmed a 10 per cent fall.

And it has flagged more hard times ahead, with FY20 earnings before interest and tax expected to be between $190 million and $200 million.

That’s up to 10.4 per cent lower than FY19’s $212.1 million.

Licences, mastheads, goodwill and other impairments, including those of fixed assets, accounted for $542.4 million, with a $16.8 million loss on the sale of Yahoo7 also among the hits.

The impairments come two years after a $436 million reduction in the carrying value of Seven’s television licences helped drag the media group to an even bigger loss.

At 1123 AEST, shares in Seven West were flat at 38.5 cents, marginally up on last week’s record low 37.5.

SEVEN WEST’S FY WOES
* Revenue down 4.2pct to $1.553b
* Net loss $444.5m v $133.7m (restated) profit in pcp
* No dividend, unchanged.

-AAP