The shares in Seven West Media and the Ten Network hit new all-time lows late last week as investors concluded both were in need of more financial surgery -- and Seven’s boardroom needed an overhaul as the Amber Harrison debacle continues. Seven West shares closed at 69 cents on Friday, after touching an all-time intra-day low of 66.5 cents on Thursday. Ten shares also closed at an all-time low of 68.5 cents on Friday (or 6.85 cents before last year’s 10-for-one share consolidation). Nine Entertainment shares rose, but that will be challenged this week when ASIC is expected to release a statement confirming that it forced the network to impair the value of its TV businesses, as it did to Seven for its Yahoo7 joint venture.
A year ago the underlying message from the toing and froing over the media law changes was to allow News Corp/Foxtel to slowly grab control of Ten, thereby eliminating (surreptitiously) the third commercial network and combining it with the fourth (which is effectively Foxtel/Fox Sports). It might have been a big stretch for the ACCC to greenlight it, but the argument was (as it is now) that the outlook for commercial broadcast media was so bad that a contraction in competition was necessary. Telstra would have had to sell 30% or so its (50%) stake in Foxtel, handing control to News. But the collapse at Ten, the impairment at Foxtel and the sharp slide in its outlook and revenues, plus an impending impairment of Fox Sports of up to US$500 million, has made that history. Investors do not like this sinking sector.