Blood everywhere in our shrinking listed media sector on the ASX yesterday in the wake of Nine Entertainment’s (NEC) surprise pre-holiday break profit warning last Friday – a move that brought a late mid-afternoon reaffirmation of an existing earnings guidance from Seven West Media (SWM).
By the close yesterday, Nine shares had led the way down, falling 16.6% to close a tumultuous day at $1.655, an all time record closing low. But the stock hit an intra day low of $1.555.
Seven West shares lost 11% by the close to end the day weak and at its all time closing low of $1.055. But it had fallen to a record low of $1.020 in mid afternoon before the company issued a statement reaffirming its previous profit guidance.
“Seven West Media Limited reaffirms its guidance for the 2015 financial year that underlying net profit after tax is expected to be between $205m to $215m,” Seven said.
"This guidance was provided at the release of SWM’s half year results on 18 February 2015 and reaffirmed at the time of SWM’s announcement of the early redemption of the Convertible Preference Shares and pro-rata offer on 29 April 2015.
“Seven’s ratings year performance has been strong delivering the largest gap to our closest competitor since 2011. The demand for key franchise programming is stronger than in the prior year and the market response to our Olympic sponsorship packages has been very positive,” Seven’s statement to the ASX read.
That contrasts with Nine’s surprise profit downgrade last Friday. Nine said it expected earnings before interest, taxes, depreciation, and amortisation to be between $285 million and $290 million, down from $311 million forecast in November.
“This reduction in earnings outlook reflects a softer than anticipated free-to-air market in the second half, which is now expected to be in low single-digit decline, driven by particularly soft conditions in May and June,” Nine said in its statement.
NEC vs TEN vs SWM – Media sector continues to contract
Shares in Prime Media Group (PRT), Seven’s regional affiliate (in NSW and parts of Victoria) fell nearly 5.5% to 77.5 cents, while Southern Cross Media (SXL), (Ten’s regional affiliate and the owner of two national radio networks) saw its shares lose 4.4% to 96.5 cents.
But shares in the third metro TV network. Ten Network (TEN), went against the trend, rising half a cent, or 2% to 24.5 cents as rumours persisted of some sort of deal with Foxtel, and the impact of a rise in ratings for its programming in the first five months of this year.
Shares in Fairfax Media (FXJ) dipped nearly 2% to just over 93 cents – it was included in the sell-off on suspicion by investors who see the weak advertising trend Nine reported on in its statement, extending to other media.
Media is a sector that is contracting and being overtaken by even resources.
