Seven Network’s parent company has posted massive losses of nearly A$1 billion (US$760 million) after writing down various assets.
The six months to December 31, 2014, saw Seven West Media post a loss of A$993.6 million, which was a significant swing backwards on the A$150 million profit posted a year before.
Most of the loss was attributed to a A$960.9 million goodwill charge on SWM’s free-TV assets, which include market-leading Australian channel Seven. Total impairment costs were $A1.15 billion.
Excluding those significant items net of tax, Kerry Stokes-controlled SWM posted an underlying net profit A$137.5 million. Total revenues across the business, which includes publishing assets and digital business Yahoo 7, were A$943 million, compared with A$975.8 million.
“Today’s statutory result reflects the tough economic conditions impacting consumer confidence and advertising expenditure over the past six months, and we believe it is prudent that we adopt a more conservative approach to the valuation of our businesses,” said SWM’s CEO, Tim Worner.
Of the impairment charge, Worner said: “This adjustment reflects the revision of future growth rates given recent subdued advertising conditions, which we must account for.
“This does not diminish our belief in the future of free-to-air television or our ability to maintain leadership, revenue share and cost control in the business.”
His comments come as launches of various SVOD platforms, including Seven’s own joint venture with Foxtel, Presto Entertainment, disrupt the traditional linear TV business in Australia.
The Australian newspaper noted SWM’s share price had fallen from A$2.13 a year ago to A$1.43 today, and that its stock had dropped by A$577 million since August.
Seven’s television division posted earnings before interest and tax of A$181.7 million on revenues of A$677.2 million.
Worner pointed to Seven’s joint venture SVOD platform, Presto Entertainment, which it operates with pay TV market leader Foxtel, as a growth driver.
“This new venture sees the leaders in subscription television and our acknowledged strengths in content creation and leadership in broadcast television work together to deliver a new and exciting service to Australians,” he said.
“Our expanding content library underlines Seven’s future as a content company delivering its programming to our growing audiences across a range of devices.”
Seven launched a pair of joint venture producers last year, namely 7Wonder, which services the UK market, and US-focused Beyond 7.