Seven West Media keeps its options open on Yahoo joint venture

Seven is mulling the future course of its local joint venture with Yahoo, after Verizon acquired the US internet firm.

A (Noah Berger/Bloomberg)

Seven West Media said it is considering strategic options for its local digital media joint venture with Yahoo after Verizon Communications agreed to buy Yahoo for $US4.83 billion in cash.

A statement to the ASX did not outline options, but they are said to include a buyout, possible sale, licensing transaction or a new partnership, industry sources said.

Seven (SWM) said it has “various options” under the agreement once the “change of control is close to being effectuated”. It is estimated the deal will be completed in the first fiscal quarter of 2017.

“Seven West Media will have an opportunity, in the period between being formally notified of a transaction and final completion, to consider which options it selects or a combination as may be negotiated with the new owners of Yahoo, Inc that creates the most value for Seven West Media shareholders,” the statement said.

Stressing it is “business as usual at Yahoo7” until any change of control happens, Seven said the deal could take six to nine months in line with larger and complex transactions.

The Australian foreshadowed the move, reporting earlier this year that some Seven executives believe the decision by Yahoo’s US headquarters to spin off its core internet business presents a golden opportunity to exit the JV by buying out the other partner.

While Seven has been busy preparing a contingency plan since last year to exit the joint venture in the event of a sale in the US, executives privately insist they remain committed to the business, which had annual revenues of $99.6 million in the year ended June 2015.

A combination of global and local partnerships is becoming more critical to counter the monumental scale of Google, YouTube and Facebook as more advertising spend shifts from local players to global giants, Seven executives believe.

For audience and advertisers, the most sought after content offered by Yahoo7 are premium video assets produced by Seven.

At Seven’s half-year result, the company’s MAVENs strategy — mobile, video, native and social ad formats — delivered strong growth, offsetting some of the softer trends in traditional display advertising. Seven’s share of net profit after tax amounted to $5.7m for the half.

Launched in 1997, the 50-50 partnership is a “long standing and very successful one between the parties”, Seven said.

Bringing together Seven’s premium content and marketing support with Yahoo’s technology, the joint venture is led by chief executive Ed Harrison.