Seven Network shareholders are a loyal and
trusting bunch. Not only didn’t they flock to Sydney’s Doltone House,
next door to head office on Sydney Harbour for this morning’s annual
meeting, but not one of them asked a question about the costly and
controversial C7 legal case that’s pitted the company against most of the Australian media industry.

Only
three questions
were asked at the meeting: two by a representative of the Australian
Shareholders Association and the third came from a shareholder who
asked about the quality of Seven’s digital broadcasts. Shareholders
were outnumbered by the media, brokers, investment bankers and lawyers.

Seen hovering on the outskirts of the meeting and media scrums was Mark Westfield, formerly of The Australian, now working for PBL and the Packer empire as an operative of the Cosway PR group.

After
the meeting there was news of a rise in the cost this year in the Seven
court case to around $40 million. Previously, Seven had indicated that the
cost this year would be $27 million with most of that “frontloaded”
into the first half. Now, that $27 million is the figure for the first
half (and it was $3 million more than the cost for all of 2005).

Analysts
said the way the case was going, second half costs could very well be
another 50% of that, or around $13 million, pushing the full year total
close to the $40 million mark.

Perhaps the shareholders present were reflecting on the sharp improvement in the company’s prospects. A
year ago in Melbourne at the 2004 AGM, chairman and major shareholder,
Kerry Stokes had to stand up and eat humble pie and reveal a 20% drop
in earnings and promise faithfully to do better.

As he told shareholders today, these promises had been met with
pre-tax earnings up around 40% on the first half of 2004-2005. That
wasn’t too hard given the depressed nature of first half earnings last
year. That’s what the apology was about.

But they are a lot
better than the 19% rise in second half earnings before interest and
tax and excluding unusual items. That has flowed from the turnaround in
Seven’s ratings and ad revenues in calendar 2005 and into 2006.