Seven West media to sell The West Australian head office

The West Australian’s building at Osborne Park in Perth.

Seven West Media is believed to be nearing a deal to sell the headquarters of The West Australian and The Sunday Times to local developer Prime West for $74.5m.

It is a move seen as one that will provide some much needed financial relief for the Kerry Stokes-backed free-to-air broadcaster.

The development comes after DataRoom revealed in February that Seven West, which owns Pacific Magazines and West Australian Newspaper Holdings as well its free-to-air television Seven Network and about 20 regional newspaper titles, was selling its real estate sites in a move to boost its cash flow and meet all its payment obligations.

Should a deal proceed with Prime West, it will offer some help for Seven West to address its net debt that was last reported to be $541m.

Prime West, a Perth-based property syndicator with over $3.8bn of real estate under management, will be buying Seven West’s office and print centre, covering three properties within Osborne Park, with three-storey office buildings on just over 2 hectares of land at 50 Hasler Rd on the outskirts of Perth’s central business district.

A sale and leaseback will be on the cards for Seven West.

When placed on the market, the hope for Seven West was that it would prevent the need for an equity raising.

Seven West Media had earlier been committed to reducing its loan pile to about $300m, according to sources.

But Seven West’s debt pile is now far less than its market value, which sits at about $132m — a far cry from the $2.2bn value five years ago.

The state of affairs is poor across the media industry from an advertising perspective amid COVID-19 disruptions, despite audience numbers and readership soaring.

However, free-to-air television already faced disruption from streaming services such as Netflix.

Regional broadcaster Prime Media also its placed real estate assets on the market to embark on a sale and leaseback deal, in what is further evidence that television broadcasters are searching for ways to secure cash at a time of falling earnings and, in some cases, rising costs.

Seven has hired Morgan Stanley to sell its Seven Studios business, which is being shopped to groups including ITV. It could be worth about $150m.

Seven Studios produces its long-running soap series Home And Away and cooking competition My Kitchen Rules, and also sells the formats abroad.

Approaches to Sony, Freemantle and Shine would also be logical.

The asset sales come as part of a strategic review, with a stake in the TX Australia transmission tower business also to be divested through advisory firm Stanton Road Partners, as well as further cost cuts.

When reporting its results in February, Seven West Media posted a $66.3m loss in a period when it made unsuccessful efforts to buy regional broadcaster Prime.

The Seven West Ventures portfolio, which includes investments in lender SocietyOne, GP booking platform Health Engine and online job marketplace Airtasker, is also potentially for sale.

Already, Redwave Radio has been offloaded, but attempts to sell Pacific Magazines to Bauer Media for $40m are still to be finalised.