Seven West Continues Clean Up With Pac Mags Sale

By Glenn Dyer | More Articles by Glenn Dyer

Shares in Seven West Media ended up more than 11% yesterday at 43 cents after the confirmed the much tipped $40 million cash sale of Pacific Magazines to rival publisher, the German-owned Bauer.

It was the third deal in a week from Seven and newish CEO James Warburton. Last week Seven launched an all-share offer for Prime Media, its NSW regional TV affiliate (valued at just under $70 million) and said it would sell its WA radio stations to Southern Cross Austero for around $28 million.

In addition, the sale of Pacific includes a commitment by Bauer to give Seven West $6.6 million on Bauer Media ‘assets” over three years. As well Bauer will keep the continuing production of Better Homes and Gardens (Fridays at 7 pm) on Seven and share “lifestyle content under a long term agreement”.

Apart from the contra ads, the value of these deals was not revealed. Also left unanswered who will pay for the production costs of the Better Homes and Gardens TV show?

And seeing Seven hold the Better Homes and Gardens licence from Meredith, the big US magazine publisher, is that being transferred or is Seven keeping it and sub-licensing it to Bauer in a deal that covers the TV rights? Seven has to keep control of Better Homes and Gardens because it is an essential part of its Friday night line up (at the moment), so it has to lock Bauer (and Meredith) into an arrangement that prevents Bauer from hawking the program elsewhere, and keeps Meredith onside.

Seven West said, “The proceeds of the sale will be used to pay down debt, improving SWM’s balance sheet flexibility and simplifying the organisation to focus on its content-led growth strategy.” Around $65 in cash will be raised by these sales (the Prime takeover will add around $19 million to debt) which with the scheduled repayments this year could see Seven’s debt fall to around $400 million. That’s still too high but the sales also raise the tantalising question of who will buy Seven. These sales have the hallmark of a company being cleaned up for sale?

But the trio of deals also raises another big question – why now and why these were not done in 2018 or 2017 when the prices would have been higher and Seven’s debt problems in a much earlier and less desperate state? Did former CEO, Tim Worner oppose these deals, did chair, Kerry Stokes? The deals were so obvious that the timing question should be asked and fully answered at Seven’s annual meeting on November 13 in Sydney.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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