News Corp, take note. Fairfax Media reports its full 2015-16 results next week on August 10 when we should get some answers as to why the need for the near $1 billion in impairments announced yesterday. That write-down took the amount Fairfax has announced in “one-offs” to more than A$4.4 billion since 2012. Much of yesterday’s cuts were aimed at lowering the value of the print assets to allow a balance sheet value on the value of the Domain online property business to be established in the company’s balance sheet.
Fairfax will report a day after News Corp reveals its 2015-16 fourth-quarter and full-year results. Both won’t be pretty — Fairfax will be a big loss for yesterday’s impairments, News will reveal the “profitless prosperity” its newspapers are generating for the company as they confront big slides in revenue and earnings in Australia, the US and UK.
The size of the advertising and circulation falls in its Australian and UK papers in the past year, and the prospect of no improvement (especially in the UK where the Brexit vote is in danger of dragging the economy into recession), raises the question of whether News Corp’s board will announce its own impairment charges, or warn that such write-downs could be coming if revenues and earnings do not improve. News last cut the value of its Australian papers by A$1.8 billion (US$1.4 billion) in 2013, with another US$276 million in restructuring costs.
While Fairfax Media is heading for some structural separation of its media assets into those with no growth prospects — its metro and regional newspapers — and those with some growth outlook, its online property business, Domain, the Murdoch clan’s News Corp should be doing the same: separating its sluggards, the newspapers in Australia, the UK and the US, from its growth businesses, the online property assets in Australia (64% of REA Group) and Move in the US, Pay TV assets in Australia in Fox Sports and 50% of Foxtel, plus the recently acquired Talksport radio assets in the UK. — Glenn Dyer
Calling all punters. Australia’s online bookies have banded together to fight a plan by the South Australian government to impose a 15% tax on local punters.
The bookies yesterday sent out emails to those with accounts warning them of the “Punters’ Tax that will impact every South Australian who places a bet”. Clicking on a link in the email generates a rather nifty pre-signed email that can be sent to your local MP with the click of a button.
They’ve also taken out full-page ads in the News Corp press. This one’s from the Oz …
It’s not really an unexpected response. A piece in the Oz today carries the argument that if Australian-based operators have their SA punters taxed, those punters could then move ot using overseas-based operators who wouldn’t apply a tax required in South Australia.
When SA Treasurer Tom Koutsantonis was asked last month about potential blowback from the gaming industry, he responded: “Bring it on.”
“If the industry don’t like this, if they think they can raise all this revenue and pay not taxes, I think that’s ridiculous,” he said.
While online bookies may be unhappy about a state-based tax on their customers, they are happy to take advantage of tax differentials in where they base their operation. As The Saturday Paper reported recently, most of Australia’s online bookies have their head offices in the NT because taxes there are capped at $550,000 a year per operator. — Myriam Robin
Seven slides. If Seven West Media is the best-run, most profitable analogue media company in the country, then judging by another year of falling revenues and profits, the rest of the sector must be in dire straights.
Seven West this morning rushed out its full 2015-16 figures 23 days earlier than last year to allow executives to head for the Rio Olympics, which will be the high point of the company’s TV broadcasting year. Seven has already won the ratings battle with Nine and Ten in total people, and will go close to scooping some of the major demos by the same ratings finish in early December. It’s news broadcasts are the national ratings winners already this year, with the change of affiliation for Ten and Nine as of July 1 impacting both networks figures, mostly reducing them compared to Seven’s domination of regional markets across the country.
But despite Seven’s dominance, it couldn’t stop another year of weakening revenues and earnings that were only partly offset by continuing cost-cutting. Commercial free-to-air TV ad revenues fell in the year to June, and especially in the six months from January to June and are now at the lowest level since the end of the GFC eight years ago. Seven managed to mitigate some of that through its concentration on costs and generating income from new productions here and offshore for other companies — revenue from third-party productions jumped 92% to more than $87 million, which trimmed a near $150 million-plus fall in group revenue for the year to June, to $60.9 million. That was probably the biggest positive to emerge from this morning’s report.
The company said:
“The advertising market remains short, particularly given the impact of the Olympic Games. At this stage, Seven West Media believes the overall outlook for the advertising market over the coming twelve months will see the television advertising market to be flat to down in the low single digits, while the advertising trends experienced by the publishing assets will continue in the coming year.
— Glenn Dyer