Prime Media cuts bonuses, freezes wages amid ‘rapid decline’ in value of company
Prime Media has scrapped long term incentive bonuses and frozen wages for senior executives amid a bleak trading environment and a “rapid decline” in its market capitalisation.
Short term entitlements have also been slashed as the regional broadcaster, which is the main affiliate of Seven Network, looks to cut costs after suffering a $93.5m loss in the 2016 financial year – as its market capitalisation hovers just over the $100m mark.
Details of the salary shake-up emerged as chief executive Ian Audsley described competition for viewers as the toughest in Prime’s history.
Writing in Prime Media’s annual report, Audsley said catch up services, live streaming by the free to air networks into regional Australia, and the growth of Netflix, Stan, ABC iView and SBS On Demand, were all piling pressure on the company.
He added that TV broadcasters were being further hamstrung by outdated media regulations that was handing new entrants a huge advantage.
“The competition for regional viewers is greater than at any other time in Prime’s history,” Audsley said.
“While Prime remains subject to media regulations introduced in 1992 that are out of step with current technology, new streaming services in our markets are unbridled in their ability to offer audiences and advertisers viewing and advertising flexibility that free to air television broadcasters, like Prime, are precluded from matching.
“The result is a deterioration of regional television advertising spends. And in Prime’s markets, television advertising fell for the second year in a row, this time by almost 6%.
“Regional broadcasters find themselves in an unenviable position,”
Audsley, who told a Senate inquiry into media reform earlier this year that regional broadcasters were at the “extremities of a lake” that was drying up, took aim at politicians for dragging their heels over reform.
Audsley appearing before the Senate in March.
“Disappointing is the best adjective to describe the manner in which the issue has been handled by the Federal Government,” he said, pointedly noting it was now almost four years since the Convergence Review recommended reform.
He added Prime has met with more than 100 federal parliamentarians to press the case for reform.
Prime chairman John Hartigan also weighed in and stressed the urgent need for reform at a time when it was facing intense competition for ad revenue from “global media and technology companies such as Google and Facebook”.
“Australia also has the most punitive licence fee regime in the world and the company supports much needed reform to the fees paid by Australian broadcasters to recognise the shifting media environment in which we now operate,” Hartigan said.
Hartigan: shareholders will be disappointed
Licence fees look set to be cut again by the Federal Government after considerable pressure from the free-to-air TV industry.
The wretched environment was responsible for a one-off cash impairment of TV licences and goodwill in 2016 of almost $123m, which saw Prime plunge into the red.
It also saw tens of millions of dollars wiped off its value, a situation which has forced the company to reduce operating expenses, Hartigan said.
“We have experienced a rapid decline in our market capitalisation over the previous reporting period and shareholders will no doubt be disappointed in the reduction of their stocks in the past 12 months,” Hartigan admitted.
In the last year Prime’s shares have halved in value from a high of 58c to a closing price on Friday of 28c, giving the company a market capitalisation of just $102m.
Following unrest at the 2015 annual general meeting over the remuneration report, he said changes have been initiated to reflect the write downs with executive bonuses reduced, or cut altogether, and wages frozen.
Prime’s top six executives saw average short term incentive bonuses reduced from 55% of their base salary to 30% while wages in the current financial year will be frozen.
Furthermore, Hartigan said the existing long term incentive (LTI) scheme was “not considered appropriate” by the board and has been scrapped.
Writing in the annual report, Prime remuneration and nomination committee chairman Ian Neal said a new LTI plan will be put before shareholders at the 2017 AGM.
He added: “Given that the current LTI plan structure is no longer regarded to be appropriate, there will not be an FY17 offer of LTI incentives to eligible senior executives.”
Audsley received a salary of $830,692 in 2016, with Hartigan picking up almost $182,000.
topics
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Ian Audsley
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The Fat Cats are getting 30% of their basic as bonuses after halving the value of the company. That’s the fucking headline. Meanwhile, everyone else gets wages frozen or are sacked. Hello…? Reporter…? Are you in?
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