Seven West Media has attributed the sharp fall in the media group’s share price to equity market turmoil but says its stock should be pushed higher by investors after a recent debt refinancing.
The television and newspaper group, controlled by West Australian billionaire Kerry Stokes, also expects underlying earnings before interest and tax for the six months to December 31 to be over $300 million.
Seven West Media shares have fallen almost 50 per cent since the $4.08 billion merger of Seven’s television interests with West Australian Newspapers was finalised in April.
The shares closed 2.78 per cent higher at $3.33 on Thursday compared to $6.34 on February 21 when the tie-up was announced.
Mr Stokes, Seven West Media’s chairman, told the company’s annual general meeting in Perth on Thursday that the share price slump was due to turmoil in equity markets and advertising demand.
But as a result of refinancing sizeable debt and the company delivering on its performance targets, it would hopefully be revalued higher by the market.
He said the share prices of other media companies such as Fairfax had also performed poorly this year.
“It’s part of the general malaise,” Mr Stokes told shareholders.
“We’ve performed as we said we would and all we can do is work our butts off as hard as we can, make the profits the best we can make them and pay our dividends.”
Mr Stokes said Seven West Media was in strong shape, with television ratings better than they had ever been and The West Australian newspaper holding on to its important Saturday circulation levels.
It was the fifth straight year that the Seven Network, which holds the broadcasting rights for the Australian Football League, had dominated the national television market.
Chief executive David Leckie said business conditions in the media sector were the worst he had ever seen but it was too early to write off newspapers in a challenging advertising market.
“Are you kidding?,” Mr Leckie told the meeting.
“We’re by far the strongest and best media company in this country – there’s no debate about it.”
He said the goal over the next 12 months was to strengthen advertising revenue, invest in creative content and manage costs to maintain margins.
According to a report in The West Australian on Thursday, Mr Leckie’s successor is expected to be announced as early as next month. Mr Leckie’s contract expires in July.
Also at the meeting, Mr Stokes defended the company’s incentive payments to board members, which had been criticised by the Australian Shareholders Association as being allocated in a “discretionary” manner.
The association wants more disclosure about the group’s key performance indicators that determine the payment of incentives.
Mr Stokes said competitive packages need to be offered in order to retain talent.
“It is important we keep the best management team in the country secure and locked down with us,” he said.
Mr Stokes also indicated that a woman might soon join the group’s currently all-male board.
