Seven West Media couldn’t have picked a busier day in the results season to unveil its disappointing 90% drop in half-year profit from $135 million to just $12.4 million.
Competing for attention against the likes of CBA, Boral, Computershare, Sonic Healthcare, Dexus, Domino’s, Orora and Sims Group, Seven West produced the weakest result.
However, there were a few share price tumbles today, with IOOF, Domino’s and Seven West Media shares all losing 7% in value by 11am this morning. Unlike Seven — which is down from more than $3 in 2012 to just 72c this morning — IOOF and Domino’s have been great performers for investors.
We had 40 minutes of upbeat presentations from embattled CEO Tim Worner and his CFO, and then chairman Kerry Stokes joined the call for questions, which were firstly confined to analysts.
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Only four analysts spoke from UBS, Deutsche Bank, Credit Suisse and Morningstar.
Asked about legal expenses by the Morningstar analyst, the CFO stressed the total costs of the Amber Harrison matter were “not material” and had been expensed over several years.
It was then opened up for about 15 minutes of media questions, and all seven of them were focused on the Amber Harrison matter.
A female Sky News reporter opened by asking why Seven’s own outlets weren’t covering the scandal. Stokes countered by referencing a piece in The West Australian today but then fudged on the follow-up about the lack of television coverage, saying he didn’t control what news editors did.
James Manning from Media Week went next, inquiring as to whether Tim Worner had ever offered to resign. Stokes didn’t answer directly but responded saying he led the best executive media team in Australia.
Peter Ryan from the ABC was third cab off the rank, backing up from his lively interview with Jeff Kennett on AM this morning. He asked about reputational damage and also whether Kennett was speaking for the company or himself. Stokes said he wasn’t the company spokesman and was just frustrated by the whole situation. In terms of complaints from retail investors, Stokes claimed it had been four letters and one phone call so far from the 24,216 shareholders.
We then got back-to-back questions from the duo who run The Australian’s Margin Call business gossip column, Will Glasgow and Christine Lacy. Glasgow asked why independent director Sheila McGregor resigned, and Stokes said it was a matter between him and McGregor. Asked if Stokes was preventing McGregor from speaking, the chairman feigned outrage and suggested that he keep trying to get her. That’s a green light for McGregor to talk, from the chairman, no less.
Christine Lacy thanked Stokes for being on the call and followed up her lead item today about the range of problems that seem to be engulfing Seven at the moment. Stokes rejected any suggestion of management or system problems, declaring “I watch the till”. In terms of the battle with Amber Harrison, Stokes claimed “there has been no governance issue, just dispute”.
The AFR’s Aaron Patrick was next up asking Worner how he was staying focused given the blizzard of negative publicity. He tried a cheeky follow-up — “How’s your personal life going?” — which was slapped down as inappropriate.
The Australian’s Mitchell Bingemann was given the last opportunity, meaning that News Corp was allocated four of the seven questions. However, there was no soft-pedalling from any media corner, which is an ominous sign for those in the Seven bunker.
The call was terminated at 11.12pm after 72 minutes, so you can’t complain about lack of access, even though more than a dozen journalists were presumably still waiting on the line to lob a question.
Most of mine got asked by other reporters, but this is what would have been said if Seven hadn’t used the teleconference system to hand-pick who got a hearing:
- How much shareholder cash has been spent so far managing the fall out from the Amber Harrison affair? Is it really over $1 million?
- Mr Worner, don’t you think it would be in the best interests of the company if you resigned, particularly with the share price down 7% in response to this disappointing 90% drop in bottom line profit?
- Tim, you called for advertisers to demand more “accountability and transparency” from social media platforms, are any of your advertisers calling for more “accountability and transparency” from Seven and you in particular in relation to the situation with Amber Harrison?
- Are your advertisers and commercial partners still comfortable to be associated with Seven given all this negative publicity? Is there any sign of softness in forward bookings which could be attributed to concerns about this issue?
Tim Worner piped up at the end saying that he regretted his poor judgement and “I am very much owning my decision”.
However, it was the belligerence from Kerry Stokes that will kick the story along most significantly. Like with Jeff Kennett, he was aggressively defensive and dismissive of both the governance issues and the lack of accountability. Amber Harrison was attacked as a thief and her claims belittled — a strategy that has not worked so far and is unlikely to in the future either.
Seven West Media should release a full transcript of the call on its website, along with the full audio file. These should also be lodged with the ASX, so everyone can make their own assessment of today’s performance. However, given the company’s past record on governance and transparency, don’t hold you breath.