Kerry Stokes has a new CEO at Seven West Media. Tim Worner has resigned effective immediately, a day after Seven shares fell to an all-time low of 37.5 cents on Thursday. That fall of 5% (with a more than 2.9% slump in the wider market) took the market value of Seven West to just $596 million. That left the shares down 31% for the year to date, while the broader market has risen sharply.
Seven West Media is a company in real trouble.
The steady slide in the value of Seven shares has cost Stokes money at a time when his other interests are doing well (oil and gas, construction and equipment rental). The stage is now set for Stokes to mop up Seven West down the track in an el cheapo bid for the 59% he doesn’t own. The market has lost confidence in the company which he chairs and has to take much of the blame for the destruction in value since 2011 (when the company was created by him and valued at $4.1 billion).
The persistent fall this year in the Seven West share price has put pressure on Stokes’ core company, Seven Group Holdings, to impair its 41% stake in Seven for a second time in less than a year. Seven Group wrote down the value of its holding on December 31 (when the shares were trading at 58 cents) by $225 million. If that happens again it will be an embarrassment for Stokes — and billionaires do not generally enjoy financial embarrassment.
Sign up for a FREE 21-day trial and get Crikey straight to your inbox
So, will Seven Group impair its Seven West holding for a second time? We will know next Tuesday when the company is due to release its 2018-19 results. Seven West was forced to lower its profit guidance for the June financial year twice — the company is now expecting profit to be down 5% to 10% after the initial forecast a year ago was for a rise of 5% to 10%.
This is quite the mess for incoming CEO James Warburton, but he’s no stranger to Seven; he’s previously worked at the company between 2003 and 2011. Since then he’s been at Channel Ten, APN Outdoor and V8 Supercars.
Worner had a decent stretch at Seven, though not one without controversy. He has been CEO since May 2013 (when the shares were above $1.70), replacing David Leckie who had taken the network from an also-ran to number one. In late 2016 Worner became embroiled in a very public affair with then Seven employee, Amber Harrison. The story lasted for well over a year and Seven’s ham-fisted attempts to close down the story drew criticism of both Seven and Worner. It also saw a number of other high-profile disputes with female employees surface, which further impacted Seven’s reputation as an employer.
All this was happening as the TV ad market was slowly fading, under the pressure of a weak economy. That was highlighted this week with Seven’s board finalising next week’s release of the 2018-19 annual results and accounts. You’d think the board would be rotten with Worner leaving immediately.
“All parties agree now is the time for change,” Stokes said in a statement this morning. “We are fortunate that James was available to commence immediately.”
“This is an exciting time for Seven…”