Chief’s pay cut as Seven slips into red
SEVEN West Media’s chief executive has wrapped up a controversy-laden year with a pay cut as his TV network suffered a $744 million loss, courtesy of persistent weak ad revenues and a massive writedown on its broadcast licences.
Seven West posted its second full-year loss in just three years, after accumulating almost $1 billion in writedowns and one-off costs, led by a $436 million reduction in the carrying value of its television licences.
Mr Worner opted not to receive any short-term incentive payments for the year, cutting his total pay to $2.74 million from $3.2 million in the previous year.
“I feel as though it hasn’t been a stellar year for the company and as such I didn’t ask for a bonus,” Mr Worner said during a briefing on yesterday’s results.
Mr Worner and other senior executives also missed long-term incentive payments as the board reassessed “alignment” of awards.
Seven slumped from a $184.3 million profit in 2015/16 to a $744.3 million loss for the year to June 30, 2017.
“None of us are getting an LTI this year — some of us are getting an STI — but those amounts are comparatively very small, in keeping with our performance,” Mr Worner said. “The size of an executive’s bonus is dependent on performance as against profit and in my own case I didn’t ask to be considered for a bonus.”
Away from its financial performance, Seven also endured unwanted publicity during the year after an affair Mr Worner had with former network executive assistant Amber Harrison was made public in December.
The matter culminated in a highly publicised court battle which the broadcaster won, with costs, after arguing Ms Harrison had breached a confidentiality agreement.
Seven recorded a total $988.8 million in impairments amid a toughening in conditions for the free-to-air media industry.
The major hit was the writedown in the value of television licences as weak business conditions and growth outlooks forced a cut to carrying values of licences and some sports rights. Revenue for the 12 months to June 24 fell 2.7 per cent to $1.68 billion and earnings dropped to $306.7 million, from $363.5 million a year earlier.
As he forecast a 5 per cent fall in underlying earnings for the current financial year, Mr Worner also signalled a tougher approach to paying for sports rights.
Seven holds the broadcast rights for the AFL and in 2015 paid $900 million for a new deal that took effect in 2017.
“Sports rights are undeniably valuable but price rises in this market are not sustainable,” Mr Worner said.
Fusion media analyst Steven Allen said while Seven has been “trailblazers and very disciplined,” about using media assets to cross promote and stay ahead in ratings, the freeto-air environment was uncertain.
“Hence the pull back and writedowns of some existing contracts. Losses can no longer be tolerated for any programming choices,” Mr Allen said.