Sky City Entertainment Group's Managing Director Evan Davies became the $47 million man yesterday after he quit, a month after the company forecast an 18 per cent drop in annual profit, job cuts and possible asset sales.
Sky City's shares rose 11c to $4.66 after the news was revealed. But the real interest for punters on a gloomy day on the market was the unsourced suggestion in the media that Sky City 'may' (not has, mind you) have received offers for part or all the company.Davies will be replaced on a temporary basis by director, Elmar Toime, until new CEO can be found. Mr Davies spent 11 years at the helm of SKC.
Sky City has been a long time candidate for some one to acquire: Tabcorp was said to be interested at one stage; PBL and James Packer, at other times.
But the price has been under pressure since May when it revealed the lower earnings, cost cuts and possible sale of two major businesses, including the cinema arm, Sky City Leisure.
SKY said in late May it would cut 230 jobs as part of a plan to trim $NZ33 million in costs, and sell its $NZ54 million Metro building in Auckland.
It would also examine its Adelaide casino, the 40 per cent-owed Christchurch casino, and cinema business, with a view to selling any part of the business not providing the required return on capital.
According to reports investors were told at briefings last week that there was a high probability that SkyCity Leisure, which owns cinemas, and the Christchurch and Adelaide casino holdings would be divested.
It was believed that the company had received "multiple unsolicited bids", possibly from private equity, for Adelaide Casino and SkyCity Leisure and in a note late last week Goldman Sachs JB Were estimated the total proceeds from the sale could be up to $NZ644 million.
Adelaide was the most valuable asset, estimated to be worth well over half the amount estimated to come from asset sales.
The company will look at sponsorships, such as the weekend's Darwin round in the V8 Supercars championship.
The possible sale of the Adelaide casino interest might mean the company won't be spending $NZ60 million on the Adelaide site, including new car parking.
Sky says it will give an update on the moves when the annual results are announced on August 29.
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Southern Cross Broadcasting will have to wait another five months, but it has finally been handed the opportunity to get a decent return on its expensive Sydney AM station 2UE by the decision of John Laws to retire from November.
Southern Cross Broadcasting shares rose after Laws announced that he would retire. SBC shares rose 13c to $15.88, making Laws a $730,000 man in terms of adding value to his employers' stockmarket valuation.
But they then dropped in the afternoon to end 4c higher at $15.75. That made Laws a $280,000 man!
That's peanuts in reality since Laws is paid some $4 million a year and SBC apparently believes that it will not have to pay out the broadcasters contract which runs to 2010.But no statement has been issued and it could be a significant saving $8 million or more: even a 50 per cent payout would be worth a few million or so and could help restore earnings at the station.
The 71-year radio legend's ratings in the tough Sydney market have worsened in recent years, coinciding with the dominance of his one time 2UE fill-in Ray Hadley, who now broadcasts on 2GB, which is owned by Macquarie Radio (MRN).
Sydney ABC local radio station, 2UE has been beating 2UE repeatedly in recent ratings surveys, while Laws has been beaten in mornings by 702's Virginia Trioli. They tied for second behind Hadley in the latest ratings period.
But Laws has claimed a healthy audience by being syndicated through around 70 other stations in regional and metropolitan markets in Australia outside of Sydney.
Southern Cross paid the Lamb family a reported $90 million for 2UE when it was the top station, thanks to Alan Jones and John Laws who were raking in the ad revenues. Southern Cross failed to keep Jones who defected to 2GB with a share of the equity in Macquarie Radio, leaving Laws at the old station and struggling.
His audience shrank, as did his ad rates and revenues: at their peak he was averaging some $18 million a year in revenues for his morning program from 9 am.
The last radio ratings survey in Sydney showed 2UE running fourth behind 2GB, 702 and the FM music station, 2Day.
Once Laws and his salary, estimated at around $4 million a year, disappears, Southern Cross will be looking for an upturn in earnings from 2UE, which was given a big cost cutting haircut a year ago after Sydney radio revenues fell.
2UE can shift Mike Carlton from breakfast into mornings, finding a partner for Peter Fitzsimmons, or it can recruit. Southern Cross has just put the cost cutting axe through its major radio profit earner, 3AW, after a couple of relatively poor surveys in the Melbourne market.
