There will be more attention than usual paid to the Seven Network’s interim profit announcement and briefing in Sydney tomorrow. Will Kerry Stokes turn up? He was in Adelaide yesterday to open the new Seven studios there and escaped without really being quizzed.
Stokes normally leaves these briefings to CEO David Leckie, but he may be unavailable given he badly injured a finger trying to close a garage door at his home last week.
The profit should be the best ever interim result for Seven but it will be overshadowed by the network’s move on the board of West Australian Newspapers, in which Seven owns 19.4%.
In terms of the current state of play in Perth, an appearance by Stokes would enable the Seven owner to keep the pressure on, while emphasising there is no conflict between the two companies.
In terms of possible deals, WAN has a very poor track record given its biggest play in the last couple of years was to lose $709 million in buying half of the Hoyts cinema chain from the Packer family, along with PBL.
WAN chairman Peter Mansell is an engineer, not a media person. WAN’s independents are Mel Ward (the former Telstra CEO from years ago), Jenny Seabrook and Erich Fraunschiel. The company is completely lacking in any independent media experience that would enable it to challenge and/or support the strategy its management has adopted.
Mansell doesn’t have the clout of former WAN chairmen, Warwick Kent, who was a former head of Bank West, and Trevor Eastwood, who is now chairman of Wesfarmers. If a major shareholder like Stokes had had a complaint back when Eastwood was in charge it would never have seen the light of day.
When WAN announced its lower profit 10 days ago, the shares dropped $1.10 on the day, costing Seven around $45 million on its shareholding. Brokers reckon Seven has paid around $11.60 a share for its 19.4% stake — the price was around $11.09 this morning, up 22 cents.
WAN reported a 21.2% drop in first half net profit to $44.25 million and cut its interim dividend by about 30%. Stripping out one-off costs, its normalised profit rose 3.6% to $59.64 million. But the company said it had moved from “normalised” profits (which were shown for two years to take account of the cost of a big new press expansion in Perth) back to the more normal “reported” profits with interest on the cost of the plant no longer being capitalised.
Seven made a big play in its statement on Monday about how the sales and ad revenue of the fat Saturday edition might soon be overtaken by the News Ltd Sunday Times.
WAN directors highlighted new “products” for the Saturday paper in their presentation to investors after the profit announcement earlier this month. It has come too late.