Seven West Media’s newspaper and magazine businesses look set to endure more tough times, with few signs of any improvement in advertising markets.
The Kerry Stokes-chaired Seven posted a net loss of $109.3 million for the six months to December 29, compared with net profit of $163 million in the prior corresponding period.
The statutory loss was due to writedowns – a $195.2 million impairment charge on the carrying value of its magazine mastheads, licences and goodwill, a $60.2 million charge for Yahoo!7, and redundancy and restructuring costs of $5.3 million.
Seven chief executive Don Voelte said advertising markets remained challenging, with revenue in the half at its newspaper and magazine divisions down 14.9 per cent and 10.9 per cent, respectively.
“We continue to see no changes to the advertising trends we see in our publishing companies,” Mr Voelte said during Seven’s results presentation on Wednesday.
“Our magazines, and especially our newspapers, are experiencing fairly good results in circulation sales versus the competition, but are having to battle their margins on a day-to-day basis.”
Seven’s television stations – which generates the bulk of earnings – posted revenue of $666.1 million, up 1.6 per cent.
“Our television network is continuing to deliver revenue share well ahead of our leading viewer ratings,” Mr Voelte said.
“This is very heartening.
“Advertising is still thin and soft but, for whatever reason, things just feel a little bit better, better in the context of forward discussions with advertisers and their long-term commitment to live sports and big program franchises.”
Seven said it expected television advertising to experience flat to single-digit growth.
Mr Voelte said it would “prove to be a very, very challenging” task even though company guidance was unchanged for full year net profit before significant items to be near the prior year’s $226.9 million.
Investors were unimpressed with the Seven result, with the stock tumbling 18 cents, or 7.14 per cent, to $2.34 at Wednesday’s close.
Patersons Securities senior industrial analyst Graeme Carson said the lack of uptick in advertising markets would be the “biggest impediment to positive short term share price movement”.
“The ad spend market isn’t showing signs of improvement, or deterioration for that matter,” Mr Carson said in a research note.
“Now that the share price has run, this result does not contain enough by way of positive outlook statements to drive the price further.”
Seven shares had risen about 40 per cent so far in calendar 2013.
The company declared a fully franked interim dividend of six cents per share.
