What: Leading television, newspaper and magazine company Seven West Media Ltd (ASX: SWM) has reported a statutory loss of $993.6 million for the six months to December 31 2014, the result included approximately $1.1 billion in impairment charges. Backing out the non-cash, one-off items Seven West Media reported an underlying net profit of $137.5 million.
So what: The underlying profit result represents a 8.4% decline on the $150.1 million achieved in the prior corresponding period (pcp), which is arguably not too bad considering the headwinds the media sector has faced.
On a diluted earnings per share (EPS) basis the underlying profit decline equated to a 16.6% drop in EPS from 13.2 cents per share (cps) in the pcp to 11 cps.
Pleasingly for shareholders, the interim dividend is set to be maintained at 6 cps.
Now what: There were positives amongst the results including an increase in revenue share for the television division from 39.7% to 40% and an increase in users and share of profit at Yahoo7.
With the share price remaining flat post the profit announcement, it would appear that the market thinks the stock is priced accurately. That's not great news for shareholders – including Seven Group Holdings Ltd (ASX: SVW) which has a 35% stake in the company – given that the share price is near a multi-year low.
The tepid response to the profit result however may suggest that a floor has been reached, which could make now a good time for investors to enter the stock if they believe better times could lie ahead for free-to-air television broadcasters.
Investors looking to do more research on the sector should stay tuned for the results release of Nine Entertainment Co Holdings Ltd (ASX: NEC) on 26 February and Ten Network Holdings Limited (ASX: TEN) on 28 February.
