Kerry Stokes is a billionaire and a hard man who will turn 79 next month, hanging on as executive chairman of Seven West Media. 

For the seventh time in a turbulent 24-year stretch in charge of Channel Seven, Stokes has kept himself on the board (and as chairman since 1996) while a CEO has departed. Last Thursday Tim Worner resigned after six years running Seven West Media. 

After huge initial CEO turnover during the opening five years of the Stokes era at Seven — between 1995 and 2000 he churned through CEOs including Bob Campbell, Gary Rice, Julian Mounter and Maureen Plasvic — it was the appointment of David Leckie for a nine-year run in 2003 which finally brought some stability and commercial success to Seven. But it has been all downhill since, mainly due to the ridiculous $4.1 billion which the old WA News was forced to pay for Seven’s TV and magazine businesses in 2011, when private equity giant KKR was driving hard to exit from its 50% stake.

The hired help hasn’t come cheap either.

After paying Worner to the tune of $3.69 million in 2012-13 (the year before he was installed as CEO), Stokes cut the pay of his CEO five years in a row. The Worner pay numbers are as follows:

2012-13: $3.69 million
2013-14: $3.53 million
2014-15: $3.04 million
2015-16: $2.83 million
2016-17: $2.74 million
2017-18: $2.71 million

This Tuesday, when Seven West Media releases its full-year results, we’ll find out what the former Seven CEO was paid in 2018-19. Based on media reports last week, it sounds like he’ll be getting an additional $2.7 million to not work over the course of 2019-20.

Worner’s successor James Warburton will start on a much more modest base salary of $1.35 million, but for the next 12 months Seven West Media will be paying two CEOs a base salary of more than $3 million so there are no short-term savings for long-suffering shareholders.

As Annette Sharp pointed out in this incisive column for the Murdoch tabloids yesterday, Worner and Kerry Stokes have prevailed over a shopping list of disasters since January 2011 when the Seven share price was flying high at $5.35. It closed at 40 cents last Friday and is no longer in the ASX200.

Minority shareholders won’t have a lot to show for the nearly $25 million they will end up paying Worner since 2011. And the biggest memory from a 25-year career at Seven will be the ill-fated affair with Amber Harrison followed by three years of expensive and embarrassing lawfare.

But with Seven’s share price hitting a record low last week, what about Stokes himself? Should he remain in charge of a major media empire?

Stokes’ growing investments in the oil, gas, mining and equipment hire sectors now dominate his media investments. Stokes personally owns 65.8% or 207.3 million shares in Seven Group Holdings which, based on Friday’s closing price of $15.69 was worth $3.25 billion. The company really should be renamed Stokes Oil, Gas and Equipment Hire because the 40.9% (619.7 million shares) of Seven West Media it owns was only worth $248 million on Friday. 

On a fully diluted basis, this leaves Stokes personally owning 26.9% of Seven West Media, worth just $163 million. The AFR valued Stokes at $5.69 billion earlier this year whereas the rival Rich List produced by John Stensholt for The Australian has him at $5.38 billion.

Sure, shares in Seven Group Holdings have weakened since those valuations were done but if you take the mid-point of $5.53 billion, Stokes’ personal equity investment of $163 million in Seven West Media represents just 2.95% of his overall wealth. 

Why does he bother? As is the case for most media moguls, controlling these media assets is likely more about the power and prestige than the actual dollars. Stokes would know that his non-media assets — particularly in Western Australia — are better protected if he controls The West Australian newspaper, one of Australia’s three television networks and our second biggest magazine empire.

However, as tomorrow’s 2018-19 full year results will demonstrate, all of these media businesses are struggling.

Rather than churning through more CEOs, perhaps it is time for Kerry Stokes to either get out of the media game altogether by selling his controlling stake in Seven West Media, or instead move to 100% control by making a decent offer to take out his long-suffering minority shareholders.

Stokes can well afford such a move and the embarrassment of staying in charge of a partially-owned sinking ship is surely something even he is not prepared to keep tolerating.

What do you think Stokes should do? Send your comments to [email protected]. Please include your full name. 

Peter Fray

Crikey is funded by readers like you.

Without subscribers, we cannot do what do. We can’t examine, explore or explain. We can’t take the spin, the weasel words, the waffle and lectures and render them meaningful. Without subscribers, we cannot help you understand the world better, so you can form your own views and opinions. That’s what we’re here to do, and that’s why we need you.

Now more than ever.

Peter Fray
Editor-In-Chief of Crikey

Join us today