Seven West Media launches $75m buyback

Seven West Media has embarked on a share buyback to shore up its faltering stock price amid “volatile trading”.

Seven West Media CEO Tim Worner says the buyback “will create value for the remaining shareholders.”

Seven West Media has embarked on a share buyback program to shore up its faltering stock price amid “volatile trading”.

By committing to repurchase up to $75 million of its shares, the Kerry Stokes-controlled company becomes the latest media firm to funnel money back to shareholders

Seven West (SWM), which operates the top commercial network, Network 7, and publishes the West Australian newspaper and Pacific Magazines, said the buyback will take place over the coming 12 months.

News of the buyback pushed Seven West shares 6.5 per cent higher to 74 cents at noon (AEST).

Seven has seen investors wipe more than a $1 billion from its stock market value in the last 12 months amid tepid conditions in the advertising market and investor concerns about the impact of media-streaming services like Netflix.

It joins Nine Entertainment, Fairfax Media and News Corp, publisher of The Australian, whose boards have all signed off on stock buybacks this year.

Should Seven fully complete the proposed scheme, its debt to equity ratio — a key measure of the company’s health — will be reduced to 2.1 times this fiscal year from more than 3 times.

Seven chief executive 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.”

It comes after Seven committed to higher annual payments to the Australian Football League from 2017 — a 50 per cent uplift under the terms of the new $900m, six-year deal.

“We are well-placed,” Mr Worner said. “Our earnings outlook and guidance remains unchanged. Our businesses are performing strongly.

“Today’s announcement of a share buyback will create value for all shareholders while still allowing us the flexibility to continue to invest in new revenue streams which we can establish using the promotional power of our existing media assets.”

Seven West reported a net loss after tax of $1.89 billion for the year ended June 27, compared with last year’s profit of $149.2 million. The firm’s result was weighed down by $2.12bn worth of writedowns.

Most of the writedowns related to television goodwill and licences impairments recognised as part of the 2011 West Australian Newspapers-Seven West Media merger.

 

With Business Spectator