SEVEN WEST CUTS JOBS, SPORTS RIGHTS BECAUSE OF 'TOUGH MARKET CONDITIONS'
Written on the 2 November 2017 by Ben Hall
SEVEN West Media (ASX: SWM) will swing the axe in a $25 million 'headcount reduction" as part of a plan to cut costs by $105 million over two years.
At the company's AGM, Seven West CEO Tim Worner also announced a further $50 million saving in 2019 as it plans to drop some of its major sports rights which were described as "not sustainable".
Worner says the cuts need to be delivered because of "tough market conditions" which caused write downs in the value of Seven's television licences and content rights.
In August, Seven West Media posted a full-year loss of $744.3 million and cut Worner's pay packet by $450,000 as the company reported nearly $1 billion in writedowns and one-off costs.
"It became evident that in light of this softer market outlook, some of our sports contracts, predominately related to major one-off events, will not deliver the level of financial return that was anticipated at the time of signing these deals," Worner says.
"Now that's not to say they are not valuable but in light of market conditions the prices we paid are not sustainable."
As for the job cuts, no details were released on how many or where they would come from.
"Like other media companies we need to restructure our business to deliver the same results with lower costs," says chairman Kerry Stokes.
"Management is focussed on reducing costs and debt."
Despite the cost cutting, management has forecast underlying earnings for the 2018 financial year to be roughly in line with guidance of between $220 million and $240 million.
The chairman also addressed the highly publicised and bitter court battle which took place after a former employee had an affair with Worner. The affair between Worner and former network executive assistant Amber Harrison first became public in December 2016.
Stokes says the negative publicity from the drama had added to a difficult financial year for the company.
"We have been obliged over the past 12 months to take legal action to protect our business from the release of confidential information and to defend the reputation of our people and our company," Stokes says.
Seven won the subsequent court case, with costs, after Harrison breached confidentiality agreements.
At around 1.30pm (AEDST), SWM shares were down just over 2 per cent to $0.64.
Business News Australia
Author: Ben Hall