Seven West Media’s (SVW) board, management and biggest shareholder, Kerry Stokes are all obviously worried about the continuing weakness of the share price, so much so that the media group yesterday attempted to put a support base under the shares by announcing plans to buy up to $75 million of its own shares.
The owner of the Seven Network and The West Australian newspaper, and a group of magazines said its shares have recently been subject to volatile trade and an on-market buyback at attractive prices will create value for shareholders.
The shares have fallen 17.6% since the 2014-15 results were announced on August 19. Seven’s shares hit an all time low of 67 cents last week). The fall from the end of 2014 when the shares were trading at $1.30, is a very nasty 48% plus.
They rebounded nearly 7% yesterday in the wake of the buyback announcement to end at 74 cents.
SVW vs NEC vs TEN 1Y – More share buybacks in media
The buyback will see up to 99,916,087 shares (around 6.6% of the SWM’s ordinary shares currently on issue). The buyback will see Kerry Stokes’ share in the company rise to more than 43% from the current level of 41%.
Seven reported a net loss after tax of $1.89 billion for the year ended June 27, compared with2013-14’s profit of $149.2 million. The firm’s result was weighed down by $2.12 billion worth of write-downs, most of which related to the impairment of television goodwill and licences (and magazine licences and masthead) values.
In yesterday’s statement, Seven CEO Tim Worner said he trusted shareholders would see the buyback as a strong statement of confidence.
“We have seen volatile trading in Seven West Media shares and we are of the view that this company is extremely well-placed to build on its leadership,” Mr Worner said.
“The on-market buyback at attractive levels will create value for the remaining shareholders.”
Seven West Media was formed early 2011 in a $4.1 billion merger. Yesterday the company was valued at $1.15 billion (it had fallen as low as $1.02 billion). The loss of $3 billion in value accelerated in the past year as over $1 billion just disappeared in a remorseless fall in the share price.
Weak advertising revenue gains, the rise of streaming video (Netflix) and mobile viewing on smartphones and tablets, have hit free to air and pay tv networks here and in other markets.
Seven though has been hit harder than most (but not as badly hit as Ten).
Seven joins media rivals, Nine Entertainment, Fairfax Media and News Corp, in introducing share buybacks this year to support weak share prices.
Seven’s major shareholder Seven Group Holdings announced a share buyback in February of this year when its profits fell sharply,
