Who thinks Seven West Media (SWM) is a good investment at the moment? This week, the company revealed its half-year profits had halved as a result of falling revenue and rising costs. Management told investors that, once again, there would be no dividend.
There’s been no SWM dividend since 2017, when investors were told there would be a “temporary” pause on dividends. In 2019 the company suffered the ignominy of being dropped from the ASX 200, Australia’s premier list of listed companies. When that happened, its shares were 48 cents. Its share price is now 24 cents, with occasional ventures to 23 cents this week, and its market capitalisation is just $350 million.
When it was formed more than a decade ago by the merger of West Australian Newspapers and the Seven Media Group, it briefly had a market value of $4.1 billion. The company is also carrying $257 million worth of net debt. The company is spending millions of dollars supporting its shares in a buyback, which is keeping the shares around the 24-cent mark. According to the company’s latest accounts, over 14 millions shares, worth $3.86 million, were purchased in the six months to December 31, 2023.
Seven’s management continues to insist things will come good and they still “believe in the power of television”, but its sludgy mix of facile reality TV, sports and right-wing news and current affairs hardly looks appealing.
One of the few people who does think the company is a buy is Kerry Stokes. His Seven Group Holdings has increased its minority shareholding to above 40% — but not for financial reasons. Seven Group has now written nearly a quarter of a billion dollars off the value of its stake in SWM since 2021-22: $83.4 million in 2021-22, $75.9 million in 2022-23, and the largest of the lot, $90.2 million in the December half of 2023-24.
The latest impairment sits pretty poorly with all the brave talk from the War Criminals’ Network about the coming turnaround — though Seven Group Holdings’ stake was valued at $167.1 million at the end of December, which values SWM at around $417 million, well above the $350 million the company is capitalised at this week.
In its 2022-23 annual report, Seven Group was brutally honest about why it was persisting with its shareholding. In the notes to its financial accounts in the annual report, Seven Group explained that Seven West “is the leading listed national multi-platform media business based in Australia. The group’s investment in Seven West Media is held for strategic purposes”.
There you go: “strategic purposes” — a phrase that didn’t appear in the 2021-22 annual report or Tuesday’s 2023-24 interim report.
Why “strategic”? Seven is one of three weakly performing free-to-air linear TV networks with little commercial future. But it can still aggregate lots of eyeballs for its reliably pro-Coalition news and current affairs, and it remains part of the news ecosystem, which gives it political influence. The real power is in Perth, where SWM controls The West Australian as well.
That paper functions as the in-house newsletter and chief enforcer of the mining and fossil fuel lobby that controls that state and its government-for-hire, currently managed by WA Labor. Kerry Stokes and Gina Rinehart dominate the place — their only challenger is Andrew Forrest, who is slowly sounding more and more like a Greens MP, except one with billions of dollars at his disposal.
With WA crucial to Labor’s reelection chances federally, owning the only newspaper and a TV outlet allows Stokes to influence local and national politicians in a way that’s never reflected in SWM’s rotten share price.
But that power comes at a cost for Stokes. How many more impairments can SWM inflict on its largest shareholder? Perhaps Stokes could look for a partner. One possibility is a sports betting company like Sportsbet (owned by Irish group, Flutter). The Financial Review reported this week that at least one betting company was sniffing around for free-to-air spectrum to screen animal torture for betting. But why rent when you could buy a big stake in the whole joint for tuppence?
Or there’s the AFL, which might find a 50% stake in a free-to-air network appealing. The AFL could easily find the money, and have its own national broadcasting operation. Plus the power that comes from continuing to be a big dinosaur even in a world headed for extinction.
It certainly does. If you find The Australian too sophisticated, too cosmopolitan, too clever, too entertaining, too concerned with facts and too generous with space for other points of view, try the West Australian. You’ll love it!
Agree totally with Bernard, and you, in the quote. The old West Australian was socially conservative, but it did try to be a purveyor of news (including local and regional news) and journal of record, neither of which now applies. Just use Trove to look back at some of the pre-1956 issues to really understand what has been so casually flushed down the toilet by the present proprietors. Without the smothering Gerry Harvey advertising, it would only be about 5 pages. I buy the Saturday edition to keep an eye on what the Fossil Fuel/White Shoe oligarchs are planning for, and for the Sabrina Hahn column, but the rest is pathetic – and the paper itself isn’t even very useful as a fire lighter. What is really amazing is that the political class still thinks it influences someone in voterland.
Yes, such newspapers used to be widely available, and their disappearance is very regrettable. On the whole they were all socially conservative, and politically conservative too with few exceptions, but they did care deeply about the accuracy of their factual reporting and journalistic standards in general. So all the news they published was typically very reliable, there would be thorough and diligent regular reporting of parliamentary debates, court cases and such like. All that part was kept factual and properly separate from the editorial column and the opinion or comment pieces, which you could therefore ignore after taking in the news if you did not care much for the paper’s ideology. Newspapers for grown-ups, that respected their readers; gone the way of the dinosaurs.
Just a casual glance at the West headlines when going through the supermarket checkout each day confirms why I don’t buy the rag anymore.
Yes, I get sick of the constant jibes and innuendo against Labor delivered during the 6pm news too. Not over heavy, but it’s pretty constant.
Like drips, from a leaky tap….
I’m a long suffering shareholder in Seven Media (I originally was a shareholder in the West Australian – which was always conservative in its views).
I only remain a shareholder (and read the West Australian/Sunday Times) from masochism – and to vote ‘no’ to all the motions of the board at the annual meeting. I won’t go as far as to watch channel 7 though – I do have my standards.
Kerry Stokes retains Seven Media to advance his fossil fuel interests. He’s very much a global heating denier, and it’s affected the editors, including in the choice of the letters to the editor published. If you’re a climate change denier, you have a very good chance of getting your letters published repeatedly even if they’re factually wrong.
Television is quickly going the way of print media as the perfect storm of superior consumer digital alternatives, demographic change and the mass migration of advertising dollars takes effect. In the case of these right wing climate denialist and pro-vulture capitalism networks, it can’t happen fast enough.
In the case of Seven, you can add spectacularly incompetent management to the mix. It’s no coincidence that the new CEO is its ex-CFO, there to pick over the bones of a much diminished local giant. And the proprietors predilection for hiring wildly unqualified, ex-army types in a form of Khaki Sheltered Workshop should have raised shareholder alarm years ago.
Let’s face it, the way Australia is currently configured, it’s a Banana Republic based on stolen resources selling its gravel pit primary produce to the highest bidder. The individuals and institutions that benefit from this stymie all sensible reform of the system to keep their snouts in the trough, passing the problem down to my generation to suffer.
I’m glad you’re a wake up, DM. Legacy media will be really be stuffed if Gerry Harvey dies and the newspaper display ads stop coming. As I said in my post which has gone into the AA black hole, banning sports betting advertising would also accelerate the decline of legacy media.
Trouble is, what replaces it? Advance Australia propaganda and misinformation?
Gambling and Real Estate (via Domain & REA), plus that grog-addled old wage thief are the lifeline of the Billionaires Bulletins passing for mainstream media in Australia.
Your question is a good one. The only way to escape the tyranny of propagandising corporate media and the open sewer of social media is a coordination of legislation that 1. Takes the money out of politics; 2. Regulates truth in political advertising via a beefed up independent body like the AEC and 3. Bans the media from taking ad dollars from wilfully harmful industries such as gambling, sugar, fast foods, petroleum, etc. It’s no coincidence that these anti-social segments are in cahoots with corporate media, given their product is equally harmful.
I’m with you except for parts of point 3. Deal with Big Sugar with a hefty sugar tax, but the rest would have to be dealt with very gradually over a long period of time. You’re talking about a major economic change because capitalism is dependent on marketing.(De-fast-fooding our society is a great aim, but it would be difficult. For starters, there are degress of “food-fastness”.) Most of the petroleum business should disappear when we’re 100% renewable and the car fleet is all electric.
‘Bring out your dead….’ It’s like the plague cart scene from Monty Python and the Holy Grail – all that mud, filth and garbage, all those corpses of media past?
…. And ‘the grail’ has slipped beyond Kerry’s grasp too…
Now where’s the Merdocks…..?