Seven West Media has joined a string of other media companies in withdrawing its FY20 guidance amid growing uncertainty relating to COVID-19.
In a statement released to the media, Seven said it has withdrawn its financial guide due to “a material fall in advertising market activity, and the suspension or postponement of productions and events”.
The statement said Seven’s “visibility into future advertising bookings” is “insufficient” to provide “meaningful earnings guidance for” for the rest of the financial year.
Out of all of the FTA TV players, Seven will most likely feel the impact of COVID-19 the most.
Struggling under debt, losing more than 80 per cent of its value in less than six months (mostly in the past month), its market capitalisation is now in danger of slipping below $100 million. In 2011, it was worth more than three billion.
According to the latest data from the ASX, SWM is now trading at 6.6 cents.
And as COVID-19 continues to wreak havoc across the globe, Seven stands to lose the most, especially if the Tokyo 2020 does not proceed. While the IOC currently suggests it will go ahead as planned, it is more likely the Games will be postponed, spelling a massive headache for Seven.
While a postponement is likely to result in rights payments by SWM being pushed back to reflect the revised scheduling, any adjustments remain subject to negotiation. However, postponements may also incur cancellation costs from underlying suppliers.
Not to mention the AFL has announced the suspension of all games until the end of May 2020, and possibly longer.
Local productions are also facing challenges with travel restrictions and COVID-19 issues. Seven said it has contingency measures in place to respond to such challenges.
“Over the last two weeks, the company initiated its business continuity plans, establishing remote working for the majority of staff, to ensure the safety and well-being of its employees and minimal disruption to operations.
“Despite these challenging conditions, the company remains focused on executing its key strategic priorities outlined at its interim financial results including transforming the business and working down debt ahead of scheduled maturities in November 2021 and 2022.”
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