Why Seven West Media shares surged

Media company outlines strategy to reinvent itself

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Seven West Media (ASX: SWM) has seen its shares climb after the company said the current financial year was ‘the worst of it’.

The owner of Seven television, The West Australian newspaper, Pacific Magazines, as well as several radio stations and online platforms, announced a new round of cost cutting, and that it expects underlying earnings to be down between 2% to 4% from last year.

At one stage the shares soared as much as 16% to $2.42.

The company’s chief executive, Don Voelte told analysts net profit would be down “a few million” from last year. Seven West also unveiled a new strategy to reduce the group’s reliance on advertising revenue, and attempt to monetise its relationship with audiences.

Rohan Lund, Seven’s chief operating officer said the five year plan would see the company move away from the role of a traditional media company, which reaches mass audiences to sell advertising, to that of an ‘audience’ company, which will commercialise its audience and content.

Earlier, Seven and Telstra Corporation (ASX: TLS) announced a joint investment of $10.4 million into HealthEngine, an online consumer health directory. HealthEngine has around 450,000 unique visitors per month, and includes an appointment booking service.

Mr Lund said it was part of Seven’s strategy to invest in adjacent verticals relevant to the media company’s audiences, and expects to build Australia’s biggest patient and practitioner marketplace, in conjunction with Telstra.

Seven is also looking to reinvent its current free-to-air offering, with online products to complement its existing free-to-air channels. Like most global free-to-air broadcasters, Seven is being forced to adapt to a new reality, and a structural change to its industry. Channel Nine is already moving that way – as an example, in a partnership with Fairfax Media (ASX: FXJ) owned Australian Financial Review, it has begun a new Sunday business show. Both Nine and Seven have had online ventures for a few years now, with Ninemsn and Yahoo!7 respectively.

Ten Network Holdings (ASX: TEN) has yet to indicate how it will deal with structural change affecting free-to-air stations, but it really has no other choice if it wants to survive.

Foolish takeaway

The name of the game is “adapt if you want to survive”. Maybe they could make a reality-TV show out of it!

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. Chances are even if you don’t own Telstra shares directly, your superannuation fund does. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here to find out whether to buy, sell, or hold Telstra in this brand-new FREE report.

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Motley Fool writer/analyst Mike King owns shares in Telstra and Fairfax.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »