Seven Group boss Ryan Stokes says TV culture ‘needs to change’

Seven Group boss Ryan Stokes says inappropriate behaviour won’t be tolerated across his television network or any of the industrial businesses he operates.

Seven Group Holdings chief Ryan Stokes says television needs to overhaul its culture. Picture: Britta Campion

Seven Group boss Ryan Stokes says inappropriate behaviour won’t be tolerated across his television business or any of the industrial assets he operates.

The chief executive told The Australian that where other sectors have moved ahead, the television industry has to recognise that it needs to change its culture just as much as media has to adapt to new business models.

Mr Stokes comments follow a tough few months for Channel 7, with hundreds of job cuts and widespread restructuring as advertising revenue falls off. At the same time Channel 7 was the subject of an investigation this week by the ABC’s Four Corners program, which alleged sexism, bullying and harassment mostly toward female staffers.

This comes on the back of similar allegations of harassment of female employees at the television news operations of rival Channel Nine, owned by Nine Entertainment.

“It’s disappointing that there is perception inappropriate behaviour has been tolerated from our perspective, we don’t tolerate any inappropriate behaviour,” Mr Stokes says.

“The ultimate focus is how to build a strong culture that enables people to thrive and there’s been a very big focus on ensuring that we’re addressing that.”

Mr Stokes’ Seven Group is the 40 per cent shareholder of Seven West Media, which in turn owns Channel 7 as well as publisher The West Australian.

Earnings across Seven’s television business remain under pressure. Picture: NCA NewsWire / Nicki Connolly

The Stokes family, headed by billionaire Kerry Stokes, controls Seven Group, the industrial conglomerate that ranges from mining services, energy and the recently acquired Boral.

The ASX-listed Seven West has its own management team, headed up by recently appointed chief executive Jeff Howard, although as controlling shareholder the Stokes family has a big say in the running of the business. Mr Howard has said Seven West will review the material raised by the ABC program.

Ryan Stokes says while his aim is on getting the right culture and settings at Channel 7, the broader media sector has to overhaul its ways.

“We need to focus on what our issue is, but it has been an industry-wide problem. And we just need to make sure the industry is making changes.”

Television again stole the spotlight from Stokes’ much bigger industrial play. While television might be under pressure, Seven’s industrial engines are firing. Seven Group posted a 30 per cent jump in headline profit to $850m for the year to end-June, helped by surging returns from the Westrac mining equipment business and continued momentum in Boral. Dividend growth matched profit at 30 per cent. Seven Group is now running at a return on equity at more than 20 per cent.

No more discount

The latest result marks more than a decade of delivering double-digit earnings growth at Seven Group, yet it is still attracting the conglomerate discount.

It trades below the average of pure play ASX industrials and also below bigger conglomerate rival Wesfarmers.

Still, Mr Stokes is working on closing the gap by putting each of his businesses through a “performance journey”. Investors were caught short by the profit that came at the top end of guidance, sending Seven’s shares up more than 7 per cent through the session.

Indeed it is the cashflow, being spun off by businesses like Westrac and Coates that has allowed Mr Stokes to reinvest into areas of growth like Boral, which is benefiting from strong infrastructure activity.

Seven Group moved to full control of Boral in July and Mr Stokes says the business is now in a position to push further on its turnaround under chief executive Vik Bansal. Mr Stokes believes there’s more to come in terms of margin rebound with Boral.

Seven took full control of Boral in July. Picture: AAP

However, media remains the clear laggard. Seven West saw earnings drop 34 per cent and revenue squeezed. This sits uneasily alongside the bigger growth engines in Seven Group.

Media’s revenue and earnings are challenged by digital rivals, at the same time Seven West’s $240m market valuation is a fraction of the $16bn Seven Group.

Mr Stokes insists there is opportunity in Seven West and recent cost cuts and overhaul of operations are part of this.

At the same time there are gains to be made in Seven’s digital assets that haven’t fully been taken advantage of. Audience numbers have never been higher on Seven’s digital platforms and video on demand services, and this represents a revenue opportunity.

“(Seven West) is a $1.4bn revenue business. Our focus is on how we get that cost structure aligned to make a healthy profit margin and cashflow through that revenue. That’s been a big shift in focus under new leadership.”

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