Seven West Media declares 6 cent dividend

Seven West Media (ASX: SWM) has beaten its guidance reporting a profit after tax (excluding significant items) of $225 million on the back of $1.87 billion in revenues.

The underlying profit result was effectively flat on the prior year, however on a per share basis diluted earnings per share fell from 26.7 cents per share (cps) to 19.8 cps due to a $440 million capital raising undertaken by the company in July 2012. The full year results were also tarnished by $295 million in impairments – primarily to the magazine business, which saw statutory profits falls to a net loss of $70 million.

The Seven Network continues to impress. The division secured 40.4% of advertising revenue share in television over the 2013 financial year and bragging rights as the most-watched television network — helped along by programming including the AFL, Australian Open Tennis, “My Kitchen Rules” and “The X Factor”. Overall television revenue was flat but when compared with newspaper and magazine revenues, which declined by 13% and 10.8% respectively, it was the stand-out division.

The board declared a fully franked final dividend of 6 cps taking dividends for the full 2013 year to 12 cps.

Fairfax Media (ASX: FXJ) also reported this week and like Seven West the newspaper giant was forced to write down the value of its assets. On an underlying basis earnings fell 37.7% to $128 million or 5.4 cents on a per share basis. The good news for Fairfax shareholders is that the firm has so far achieved $193 million in annualised cost savings with an aim of reaching $311 million by June 2015. Net debt is also now down to $154 million from $760 million a year earlier.

Also in the media space, Southern Cross Media (ASX: SXL), which has radio and television interests reported revenues decline of 5.4% this week. These declines coupled with increased costs led to a 9.3% decline in underlying net profit after tax to $90.8 million, 12.9 cents per share on a per share basis.

Foolish takeaway

Industry-wide market conditions faced by media companies have certainly been challenging. Over the year to June the metropolitan television advertising market declined by 2.2%, while the newspaper and magazine advertising markets declined by a whopping 19.6% and 19.8% respectively. For investors, valuation of Seven West Media or Fairfax and to a lesser extent Southern Cross Media requires an accurate analysis of the degree of structural versus cyclical decline remaining.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!