TV Broadcaster Seven West Media Ltd (ASX: SWM) has written down the value of its goodwill and television licenses, newspapers and magazines by a whopping $2,122.8 million.
That has seen the media company report a net loss after tax of $1.9 billion for the 2015 financial year. Excluding the writedowns and other significant items, Seven reported an 11.5% fall in net profit to $209.1 million.
Here are the details…
- Revenues: Down 4% to $1,770.3 million
- Underlying net profit: Down 11.5% to $209.1 million
- Underlying earnings per share:8 cents per share
- Dividend: 10 cents, fully franked, with 4 cents of that to be paid in October 2015
- Dividend yield: 12%
- Net debt: $425.6 million
And earnings before interest and tax (EBIT) by division…
| Division | EBIT ($m) | Percentage change from previous year (%) |
| Television | $296m | Down 5% |
| Newspapers | $52m | Down 28% |
| Magazines | $20m | Down 0.5% |
| Other | $3m | Down 82% |
Metropolitan television is the company's largest earner by a large percentage (83%), but advertising revenue continues to fall – down 3% last year.
Newspaper advertising revenues were also down 13.3% while magazines saw advertising revenues fall 5%. This clearly shows the move away from traditional media, and the trend is likely to continue.
AFL broadcast rights
The big news for Seven and its shareholders is the new 6-year deal signed last night with the Australian Football League (AFL) for the 2017 to 2022 seasons. It is estimated that Seven is paying around $1 billion, with News Corp (ASX: NWS) – owner of Fox Sports chipping in $1.2 billion and Telstra Corporation Ltd (ASX: TLS) between $250 and $350 million for the digital rights. Foxtel, jointly owned by News and Telstra will broadcast every game live each week, but Seven gets 4 live games a week, and the Finals Series.
Foolish takeaway
With three structurally declining businesses, Seven's 12% fully franked dividend yield is deceptive. The company faces major challenges ahead in diversifying its business away from its traditional base.
