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Seven’s slippery slope

Shares in media company, Seven West Media (ASX: SWM) have fallen after the company posted a $109 million loss for the first half of the year, thanks to one-off charges totalling $255 million. In afternoon  trade, shares are currently down more than 6%.

Seven West owns the Seven Network free-to-air TV station as well as the West Australian newspaper, magazine publisher Pacific Magazines and has a joint venture with US company Yahoo! in the Yahoo!7 website.

The company wrote down the value of its carrying values of the magazine business, its investment in Yahoo!7 and incurred redundancy and restructuring costs.

Net profit after tax and before one-off charges fell 12.7% to $142 million, and the company declared a 6 cent full franked interim dividend. Operating cash flow jumped compared to the previous period to $240 million, from $170 million.

Seven’s broadcast television division continues to lead the market in TV ad revenue, with an estimated 40% of the total market. Nine Entertainment holds a 38% share, while Ten Network Holdings (ASX: TEN) continues to see its market share fall, dropping to 21.6%.

Seven West expects flat to low single digit growth in TV advertising, but faces major structural issues in its print media divisions, with newspaper revenues falling 15% and magazines sliding 11% compared to the previous year –  issues that are also faced by Fairfax Media (ASX: FXJ) and APN News and Media (ASX: APN).

Foolish takeaway

With $3.66 billion of intangible assets on its balance sheet, $1.5 billion of debt, low TV revenue growth, and facing structural issues in its newspaper and magazine divisions, Foolish investors might want to watch this one from the safety of the sofa.

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