SEVEN TAKING HEAT ON MULTIPLE FRONTS
SHARES in Channel 7’s parent company have tumbled to an all-time low after the group swung to a first-half loss and cut its full-year earnings forecast.
It comes as a difficult advertising market and weak start to the ratings year weigh on the broadcaster.
Seven West Media yesterday booked a net loss of $66.3 million for the six months to December 28.
Revenue dropped 3.2 per cent compared with the same period a year earlier, to $771.7 million, while the result was also marred by one-off hits totalling $165.6 million.
They included writedowns in the value of Seven’s television licence and other assets, plus “onerous contracts” – predominantly relating to cricket rights.
Shares in the Kerry Stokes-controlled group tumbled after the results were released, closing 21.2 per cent, or 5.5c, lower at 20.5c.
That is an all-time low and gives the company a market value of $323 million – well below its debt pile of $541.5 million.
Seven has made a weak start in the ratings this year as it struggles with some of the smallest audiences yet for melodramatic cooking show
My Kitchen Rules.
In a statement lodged with the Australian Securities Exchange, Seven chief James Warburton said the group had invested in a “new content strategy” for prime-time entertainment that would take effect in April.
Seven said its AFL audience grew 3 per cent last year while Test cricket was up 12.5 per cent, but it has taken a $51.8 million hit on “onerous contract costs” related to cricket programming.
The broadcaster is paying about $75 million a year for its cricket rights.
Its underlying earnings before interest and tax – a figure tracked by industry analysts that strips out one-off costs – was $119.7 million in the past six months.
That is down 21 per cent from the same period a year earlier, based on results that have been restated to reflect a new accounting standard.
On the same basis, Seven’s net profit a year ago clocked in at $83.8 million.
The group has cut its forecast for full-year underlying earnings to a range of $165$175 million, cautioning that is “subject to market conditions and improved ratings”.