Seven West Media posts large loss, CEO Tim Worner’s forfeits bonus; Fairfax bounces back to profit


August 16, 2017 13:21:43

Seven West Media chief executive Tim Worner has been hit with a $450,000 pay cut as the company posted a full-year loss of $744 million, while Fairfax Media has bounced back to an $84 million profit.

Key points:

  • Seven posts full-year loss of $744m on nearly $1b in write-downs
  • Earnings fall from $184m last year
  • CEO Tim Worner’s short-term bonus cut to zero, other executive bonuses heavily reduced

According to Seven’s annual report, Mr Worner’s bonus has been cut to zero, taking his 2017 total pay down to $2.74 million from $3.19 million in 2016.

Other Seven executives were not immune, with most taking hefty bonus cuts.

Mr Worner confirmed that it had been his decision to forfeit his 2017 bonus.

The Seven West CEO said his remuneration was a matter for the board to consider, but he did not think the Amber Harrison scandal was a factor in 2017.

“In my own case I just feel as though it hasn’t been a stellar year for the company and, as such, I didn’t ask to be considered for a bonus,” he said.

When pressed by the ABC on whether fallout from the Amber Harrison legal battle contributed to his pay cut, Mr Worner conceded that health of Seven West could be measured in many ways.

“That’s a reasonable question. I guess if we’re talking about financial performance, I don’t think so,” he replied.

“But I guess there are various ways that we would measure the health of our brand. Two of the big ones for us are ratings and revenue.”

Mr Worner also confirmed that the company’s human resources policies had not been updated as a result of his office affair with Ms Harrison.

While the court ruled in favour of Seven and ordered Ms Harrison to pay costs, Seven chairman Kerry Stokes is known to have expressed his concerns to Mr Worner about the reputational damage to the company.

Mr Worner also had a $100,000 cut to his bonus in 2014, when the board learnt of the affair.

Seven hit by almost a billion dollars in write-downs

The $744.3 million loss follows a profit in the previous year of $184.2 million, and was due to close to a billion dollars in write-downs.

In a statement, Seven statement cited “revised market growth assumptions” that are impacting the carrying value of its television, newspaper and magazine businesses.

Mr Worner referred to the changing media landscape as the company “accelerates the transformation of its business across all platforms.”

“Our results reflect a tough market, one that continues to change at pace, but a pace that we must match in our transformation,” Mr Worner said.

“Despite these tougher conditions, we continue to lead in the core markets in which we compete, while at the same time making the necessary and sometimes difficult decisions in the transformation of our business.”

Mr Worner said the company was focussing on tighter operating costs, with savings of $20 million excluding the Olympic Games, license fees and third party commissions.

Seven’s final dividend to shareholders was unchanged at two cents a share.

Seven is expected to come under pressure to outline the costs of the Amber Harrison court battle.

Fairfax bounces back to profit

In contrast, savage cost-cutting has allowed Fairfax Media to bounce back to profit, despite a 4.8 per cent slide in revenue.

The struggling publisher also benefitted from much lower asset value write-downs and one-off costs of $59 million, compared to the huge write-downs that sent it to a $773 million loss last year.

This financial year, the company booked an $84 million net profit and a $143 million result if one-off costs are excluded.

That left it in a position to pay shareholders a dividend of 2 cents, bringing total payouts to investors over the financial year to 4 cents per share.

Fairfax boss Greg Hywood lauded the results, saying the “transformation” initiatives and strategy commenced five years ago were bearing fruit.

“Domain delivered 19 per cent growth in digital revenue, notwithstanding a difficult listings environment in the first half,” he observed.

“Our three publishing businesses are modern, cost efficient and sustainable across digital and print.

In the context of the global structural change impacting upon the media industry, the fact that our publications remain profitable and sustainable is an outstanding achievement.

“Our ongoing cost reduction programs underpinned a 6 per cent decline in group operating expenses, notwithstanding continued investment in our growth businesses.”







First posted

August 16, 2017 09:53:30

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