Seven’s Kerry Stokes presses pause on media acquisitions

Seven West Media is not in negotiations with News Corp or Fairfax, and has found it difficult to “find alignments” with other organisations in a way that produces value, executive chairman Kerry Stokes has told shareholders today.

Asked a number of times about future mergers and acquisitions at the company’s Annual General Meeting, Stokes was firm about the possibilities of Seven West joining with News or Fairfax.

Stokes’ comments come the same day as the company announced its 2 year cost cutting program

Stokes said circumstances, including the surprise acquisition of Ten Network by CBS, have put a “pause button” on media acquisitions as the market works out “what actually” fits together.

Two weeks ago, the House of Representatives passed the amendments to the Federal government’s broadcast reform bill, removing the two out of three and 75% audience reach media ownership rules.

Media owners were quick to endorse the government’s actions, but since then there has been no action and few indications about mergers or acquisitions in the sector.

“Politicians seem to have some view of how the markets will align, but the market participants have another view and most of us are about trying to align with value and it’s been very difficult to find alignments that come together and produce value for us,” he added.

But he refuted claims discussions about acquisitions or mergers were being had with News Corp or Fairfax.

“In regard to News, we work very closely with News in lots of different areas and we find them first class partners in the areas we do co-operate in. We’ve had no discussion with them or with Fairfax on any merger or transaction,” said Stokes.

“Our focus has been a little bit different, we put together the West and Seven in Perth, and we are still on that journey because we put the newsrooms together but we still haven’t extracted the values we expected to get of them coming together.

“At the moment we have two newsrooms, we want to create a combined one purpose newsroom, which is the path we are going down. If we are correct and that works, we think there’ll be a value proposition that will make that a much better opportunity.”

He said he didn’t know if he could apply the same logic to Fairfax’s broadsheets.

“Their circulations are probably too low and you have to rely on their online editions to make it work, whereas in Perth we are actually growing our print editions. I think our print edition grew 8% this year,” he said.

“We are trying something different, it may or may not work but our focus is on that and if that proves to be correct that will then open up other opportunities to discuss whether with News or Fairfax, but until we understand how those dynamics work, we are not sure just putting two organisations together actually brings synergies.”

During the shareholder’s meeting, Stokes also critiqued the requirement of creating local children’s production, arguing it should be in the hands of the ABC.

“Our biggest issue is in fact children’s production. We are being forced as a free to air television network to produce a high number of children’s programs most of which of similar genre are available on ABC channels or online or on various other offerings for free and we have real trouble trying to get any revenue back from that expenditure,” he said.

He admitted the ABC could do better with children than Seven could, adding: “The burden on us to produce in that genre is quite onerous.”

At time of publish, Seven West Media’s shares had fallen by 5.3%, with market capitalisation at $934.98m.


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