14 November, 2019

Kerry Stokes: “Seven’s Not For Sale”, But Concedes Tech Giants “Vacuuming Up” Ad Dollars

By B&T Magazine

Seven West Media chairman Kerry Stokes has again dismissed media speculation that he wants to sell his television interests.

Ever since Stokes replaced CEO Tim Worner with newly minted boss James Warburton last August, rumours have swirled that one of Warburton’s chief tasks would be to fatten Seven for sale (most likely to News Corp).

Rumours not helped by Warburton’s decision to cull shows (Sunday Night the first to be axed), streamline Seven’s management and sell Pac Mags to rival Bauer. Adding to that, there’s this week’s news that Seven – and rival Nine – are both predicting softening ad markets over the coming 12 months.

In Warburon’s previous role – as CEO of outdoor media player APN – he did exactly that, prime the company for its eventual sale to rival JCDecaux.

“I do APN Outdoor and everyone thinks I’m selling [Seven],” Warbuton was quoted as saying in yesterday’s Sydney Morning Herald.

In an interview with B&T post last month’s Upfronts, Warburton again scotched rumours his job was to find a buyer for the network. “I am not fattening [Seven] up to sell it. I don’t know why people assume that,” he said.

Speaking at Seven’s AGM yesterday, Stokes reiterated that if he’d wanted to sell Seven “we could’ve sold a long time ago”.

Stokes added that he wanted to now give Warburton “a chance to grow the business”.

However, Stokes agreed that free to air television wasn’t without substantial threats, namely from the likes of Facebook and Google who continued to “vacuum up” the ad dollars.

“My major concern is [digital platforms should] just pay tax. They take enough money out and it’s net cash. The fix is [to] find a way from stopping the big platforms from taking the money away,” Stokes said, his comments reported on Nine’s The Australian Financial Review.

“At the end of the day, they’re like a vacuum cleaner; they come to Australia, vacuum up all the money and go away again. We get what’s left.

“I think there’s a desire to level the playing field … the problem we have that no one addresses is that it’s all part of the Australia-America trade agreement.

“So all these studios and Facebook they fall under a special section of the trade agreement that [means] we can’t do any special tax on them.

“When you put them all together they just take the money away and it’s difficult for the government to put that into place,” Stokes said.

Meanwhile, Warbuton used yesterday’s AGM to warn shareholders that Seven’s ad woes would most likely continue through to mid-2020.

Ideally, things would improve with the network’s coverage of the Tokyo Olympics starting in July.

Seven grew its share of the TV advertising to 39 per cent during the September quarter and the broadcaster now expects underlying earnings before interest and tax to fall to the lower end of its previous expected range of between $190 million and $200 million.

“We are now forecasting the metropolitan television market to be down mid-single digits for the financial year,” Warbuton added.

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James Warburton Kerry Stokes Seven West Media