Craig Hutchison’s sports and media empire on the ropes as directors, auditor sound alarm

Craig Hutchison’s media and sports empire is at serious risk, as company directors and auditors warn about his group’s ability to survive if it does not find a cash injection or new investors in the next nine months.

The journalist-turned-media executive’s Sports Entertainment Group (SEG) has a growing suite of assets, including SEN Radio, a TV production company, the Perth Wildcats and headline talent including Gerard Whateley, Kane Cornes, Matty Johns and more.

Yet after reporting a $9.3 million loss in FY23, the pressure on the business has increased, with much of its debt due in August next year.

SEG insists it remains a going concern, pointing to positive cashflow and improved trading.Credit: SMH/The Age

The group has only $1 million left to draw down on from its $28 million credit line from Commonwealth Bank of Australia (CBA), according to its most recent set of accounts.

A director’s note in its annual report, released in late October, stresses the business’ status as a going concern is now a “material uncertainty” after it breached bank covenants relating to its loan, and remains dependent on the CBA not calling for repayment immediately.

The matter was also acknowledged by auditors, BDO, who drew attention to the notice that it said, “may cast significant doubt about the group’s ability to continue as a going concern” and “realise its assets and discharge its liabilities in the normal course of business.”

“Our opinion is not modified in respect of this matter,” BDO wrote.

However, SEG insists it remains a going concern based on several factors, including positive cashflow, forecasted improved trading performance in FY24, and completion of its acquisition and investment strategy.

The company is now seeking fresh capital, pitching to high-net worth private investors, in an attempt to reduce its comparatively large borrowings before the deadline, according to multiple sources with knowledge of the process not authorised to speak publicly.

The company’s filings state it is evaluating options for raising additional capital, which it says would assist in reducing borrowings.

Hutchison, who declined to comment when approached by this masthead, joined SEG as chief executive via a 2018 merger with his own sports content business, Crocmedia, and the company’s fate is deeply tied to him.

He is also on-screen and on-air talent for his Sports Entertainment Network – for which he is separately paid $550,000 annually – and is the company’s second-largest shareholder.

Between chair, Craig Coleman (also co-founder and managing partner of SEG’s largest shareholder Viburnum Funds), fellow alternate board director Ronald Hall, racing analyst for SEN, John “Dr Turf” Rothfield and Hutchison himself, sits 59.2 per cent of the share register.

Hutchison with leading SEN broadcaster Gerard Whateley.

Sports Entertainment Group has a uniquely diverse set of assets, including 65 radio stations across Australia and New Zealand, a TV production company (Rainmaker), a portfolio of five sports teams, broadcast rights to almost all major sporting codes (AFL, NRL, Test cricket and Big Bash League, NBL, both A-Leagues and the Australian Open), the AFL Record and digital racing brand and network, SEN Track. The latter is a cash cow for SEN, described by a current employee as a “juggernaut”.

Since 2018, Hutchison has led an acquisition offensive to build the above assets, spending $46.7 million in the process. His latest deal will see the company own the eighth Super Netball Licence in 2024, unveiling the Melbourne Mavericks. The licence went to market after the Collingwood Magpies, the nation’s largest sports club, closed its netball operation after chief executive Craig Kelly deemed it unsustainable.

While Hutchison is steadfast in his plan to build a specialist sports media business, his strategy has perplexed some, particularly the move into participation-led sports such as basketball and netball, with the latter facing serious financial woes.

The Perth Wildcats are one of SEG’s sports teams.Credit: Getty Images

One senior industry executive called some of SEG’s recent acquisitions “questionable”, while another said its combination of assets was “complicated”. Both spoke anonymously due to personal connections to the company and Hutchison.

After details of the loan and results attracted unwanted attention, Hutchison responded on his own SEN radio show, Off the Bench, saying the company was in good shape.

“We are an incredibly strong business, we’ve never been in better nick,” Hutchison said, despite adding that the company “would have liked to have done better”.

Questions remain though over SEN’s ability to impose a national footprint, with its Sydney and more recent Brisbane radio networks struggling to cut through, unlike in Melbourne where it’s buoyed by a footy-obsessed market led by AFL media darling Gerard Whateley.

The main network collects a 3.1 per cent share in Melbourne, compared to 0.7 per cent in Sydney and 0.9 per cent in Brisbane.

It also has lucrative deals with several bookmakers, producing in-house content and shows for Ladbrokes and Neds, while its content provides fertile ground for wagering firms to sink millions in advertising targeted at SEN’s hard to reach, male-heavy demographic.

This too though is on an uneasy footing, with the future of advertising from the sector leaving revenue for SEN and all media companies in limbo, a risk company directors also flagged to investors.

Nine Entertainment, the owner of this masthead, owns a 3 per cent stake in SEG via 3AW.

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