Seven to make $25m worth of job cuts in two year cost cutting plan

Seven West Media will make $25m in recurring annualised cost savings through ‘headcount reductions’ as part of plans to make $105m worth of savings over the next two years, CEO Tim Worner told shareholders this morning.

Speaking at today’s Annual General Meeting, Worner said the network will also save $50m from the roll off of major sports rights which were dubbed “not sustainable”.

Worner will return its focus to delivering value to shareholders

The quantity of jobs to be axed is not yet clear.

Later in the meeting, Seven West Media chairman Kerry Stokes spoke about creating a one purpose newsroom in Perth, as opposed to the two newsrooms resulting from Seven’s acquisition of News Corp’s The Sunday Times and PerthNow last year.

But Stokes also noted the Board would reduce its fees by 20%, effective immediately.

“I can tell you that the Board today agreed, because we are asking our employees to look at what we are doing and there will be certain jobs that will be eliminated, there will be certain jobs that will pay less in the future than now, and recognition of that the board today agreed that the Board fees will be reduced by 20% as from today, so we wanted to actually ensure people it’s serious, but the Board is also going to lead by example,” he said.

Worner attributed the 2017 financial results to a “tough market impact by both structural and cyclical pressures.”

In the period we recorded material write downs in the carrying value of our television licenses and some of our content rights, which is a function of changing market conditions,” Worner said.

“It became evident that in light of this softer market outlook, some of our sports contracts, predominantly related to major one off events, will not deliver the level of financial return that was anticipated at the time of signing these deals.

“Now that’s not to say they are not valuable, but in light of market conditions the prices we paid are not sustainable.

“The value we bring – that free to air television brings – to sporting codes, has simply not been recognised and will need to be in any future sports rights deals.”

Worner’s comments today follow those he made in August, when he indicated sports rights had reached a “tipping point” in Australia.

Seven West Media has reported a net loss of $745m for fiscal year 2017, a $929m turn around from last year’s net profit of $184m.

EBITDA (earnings before interest, tax, depreciation and amortisation) was $306.7m, down from $363.5m in the prior corresponding period. The company expects EBIT to fall 5% for FY18.

Stokes described this year’s results as “disappointing” but said the company will look to reduce costs and drive growth in shareholder value.

“Like other media companies we have a need to structure our business to deliver the same results with lower costs. To do this will require redesigning how we go about our business. Management is focussed on reducing costs and debt,” Stokes said.

“Beyond confronting the challenge of change and identifying the opportunities to build your company, we have, over the past twelve months, been obliged to take legal action to protect our business from the release of confidential company information and to defend the reputation of our people and company.

“As detailed in two separate, successful NSW Supreme Court judgments, your company acted professionally and appropriately in the handling of a matter involving a former employee.

“I wish to assure you that our success over the past decade and the transformation of our business is built on a strong culture. It is a culture of inclusion and respect. There are always opportunities to improve culture and accountability and that will be a continuing focus.

“While it has been a tough and challenging twelve months, we have made significant progress in defining the company’s future direction. The Directors are committed to building shareholder value. As is our management. And all of our people.”

Worner said the company will remain focused on capturing large share of its total video market, growing its digital business, driving returns through global production and increasing audience reach.

“Going forward we know there will be challenges, we’ve done a lot but more has to be done,” he said.

“However, we are aligned, our strategic goals are set and we believe we have the strongest set of media assets in the country from which to execute.”

Currently, Seven West Media’s market capitalisation sits at $968.16m.


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