In approving the sale by Seven West Media of its Pacific Magazines business to rival Bauer Media, the ACCC, the competition regulator, has all but written off the magazine business.

Originally the commission had a lot of doubts about the anti-competitive nature of the two biggest magazine groups in the country combing, but in a statement on Thursday morning the commission said that aspect of the deal didn’t really matter.

Investors thought the same way about the impact on Seven West Media — the shares edged up from 6.9 cents to 8.1 cents on the ASX this morning, a rise of more than 17%.

But the $40 million in gross proceeds doesn’t even touch the sides at a media group with gross debt of well over $600 million and weakening prospects of making a profit this financial year.

Tellingly, the ACCC said in its statement that circulation and revenue declines for magazines were “sustained, substantial, and likely to continue”.

It’s really a charity deal, and don’t be surprised if struggling legacy media companies try and use this “increasing irrelevance” argument as a template.

The trouble is who wants to buy the likes of Seven West Media, which this week joined rival Nine (and Southern Cross) in withdrawing earnings guidance for 2019-20?

Those won’t be the last statements from both media groups on earnings, cost cuts and job losses if the revenue slide continues.

While Seven and Nine will not have to pay for this season’s AFL and NRL rights, they will lose budgeted ad revenues as well.

The closure of the major winter codes has put Foxtel under growing pressures from subscribers who have already exited the great hope — the sports streaming service Kayo.

To try and hold home broadcast subscribers, Foxtel has freed up access to more channels for users on basic level contracts in the hope of retaining them. This is only a two-month deal to try and stop exits as people lose their jobs.

It won’t be the last statement of this kind from the weak pay TV giant, which has been on life support from News Corp now for a year or more.

Southern Cross Media might be a prime candidate to merge with radio rival HT&E. Southern Cross is looking at cost cuts (salary cuts have already been imposed). Southern Cross is looking to raise money.

Nine Entertainment might make another attempt to unload Stuff, New Zealand’s second major print group, into a merger with NZME. The NZ Commerce Commission will probably let it through this time given the slide in revenues, earnings and staff levels, with worse to come under COVID-19.

For Nine Entertainment (shares down 44% so far this year) and News Corp (shares down 40% as well), the emerging problem is shared — the slide in the value of their real estate listings arms, REA (News Corp) and Domain (Nine).

REA shares are down 30% so far this year and Domain’s have halved as government virus restrictions put pressure on auctions, open houses and sales.

Real estate auctions might be going on online, but there’s no way that is going to generate ad revenues for Nine or REA, at least in the same volumes as a year ago.

REA has signalled its gloomy outlook by withdrawing its earnings guidance for 2019-20 and postponing an opportunistic lift in fees to try and slow the impact of falling listings.

News Corp this week started retrenchments among its newspapers and started closing small titles, Sky News and Fox Sports sacked more than 20 journalists. Nine has a plan to cut costs by $100 million over the next three years, which is looking increasingly redundant.

A tighter time frame is almost certainly coming for the cuts.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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