In a significant shift within Australia’s media landscape, Kerry Stokes has announced his decision to step down as chair of Seven West Media, effective February next year. This move comes as Seven West Media, once a titan in the industry, faces ongoing financial challenges and strategic realignments.
Back in 2011, West Australian Newspapers (WAN) acquired Seven Media Group for a staggering $4.1 billion, forming Seven West Media, the country’s largest diversified media enterprise at the time. Kerry Stokes, a prominent figure in the deal, held shares in both entities, positioning himself as a formidable peer among media giants like the Murdochs and Fairfax Media.
The Rise and Decline of Seven West Media
The initial success of Seven West Media was short-lived. The company soon encountered asset impairments, declining cash flow, and mounting debt, necessitating a series of asset sales, cost-cutting measures, and staff reductions. Allegations of harassment within the workplace further tarnished its reputation, painting a picture of a toxic organizational culture.
As of Monday’s close on the Australian Securities Exchange (ASX), Seven West Media’s valuation had plummeted to just $215 million. The Stokes family’s 40% stake in the company now represents a minor investment within their larger industrial conglomerate, SGH, which is valued at over $20 billion and spans sectors like mining, construction, and energy.
Strategic Realignment and Future Prospects
With the impending merger with Southern Cross, SGH’s stake in the new entity will be reduced to 20%. This realignment paves the way for Kerry Stokes’ retirement from the chairmanship, leaving his son Ryan as a representative on the board. The new company will appoint a non-Stokes chair, and SGH is expected to divest its $80 million stake to institutional investors.
Despite being the most-watched TV network in Australia, Seven West Media’s future appears uncertain. The rise of digital platforms like Netflix, YouTube, and TikTok has siphoned advertising revenue away from traditional media outlets, challenging their financial viability.
Legacy Media’s Financial Constraints
The Seven West-Southern Cross merger underscores the financial constraints plaguing legacy media. The deal, executed entirely in shares, mirrors similar transactions in the industry, such as News Corp’s recent sale of its Foxtel stake, which involved no cash exchange. Instead, News Corp and Telstra received paper entitling them to future stakes in Foxtel’s new owner, DAZN, should it go public.
This pattern reflects a broader trend: the inability of traditional media companies to generate the cash needed for major acquisitions, relying instead on share-based transactions.
Industry Implications and the Road Ahead
The consolidation of Seven West Media and Southern Cross leaves Nine Entertainment as Australia’s dominant media player. Formed in 2018 through the merger of Nine Network and Fairfax Media, Nine Entertainment has also faced its own challenges, including management instability and harassment allegations.
The evolving media landscape raises questions about the future of free-to-air television, particularly as younger audiences gravitate towards digital platforms. This shift has political implications, as media companies wield less influence over election coverage and public opinion.
As Kerry Stokes prepares to retire, the industry will closely watch how Seven West Media navigates its new chapter. The company’s ability to adapt to digital trends and maintain relevance in a rapidly changing environment will be crucial to its survival.
