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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.