The dismemberment of the Kerry Stokes’ media empire, Seven West Media continues with the sale of the company’s controlling interest in much of its international production businesses in the US and UK to Beyond International for an undisclosed amount.
Beyond is and has been very close to Seven – it has created lots of programming – the Beyond 2000 series back in the late1980s and early 1990s was a prime example while talent and staff have moved both ways. Seven’s former CEO, Tim Worner, and its late production chief, Brad Lyons are Beyond alumni who moved to Seven.
Beyond announced the deal on Thursday night, (6.39 pm) well after the ASX had closed for trading for the day.
Oddly, Seven West Media did not issue the same statement on Thursday night, or on Friday, even though most companies involved in transactions with each other do so.
The sale adds to the list of assets offloaded by Seven, CEO James Warburton and Kerry, and Ryan Stokes. The company’s WA regional radio stations were sold to Southern Cross Austero last year for $28 million, Pacific Magazines was sold for $40 million in May, the company’s WA HQ for Seven Network and WA Newspapers was sold and leased back for $75 million and more than 100 staff from production, sales and other sections of the company, have been sacked in recent months. As well the cost of the AFL broadcast contract has been cut by more than $80 million and is a major part of the planned $200 million in cost cuts by June next year.
Seven West shares closed at 9.5 cents on Thursday and fell to 9.2 cents on Friday, valuing the company at just $146 million. It was dropped from the ASX 300 at the end of June so it is now a highly speculative stock and ‘junk’ to use a credit rating ranking (ie junk bond).
In its announcement, Beyond said its Irish subsidiary, Beyond Entertainment Ltd (or BEL) had acquired the remaining 50.98% of the share capital of 7 Beyond Media Rights Limited (7Beyond) that it did not previously own from Seven Network (Operations) Limited (Seven), giving BEL 100% ownership of 7 Beyond. In addition, BEL has acquired 100% of the share capital of Seven West Studios Limited (SSUK) from Seven Studios Holdings Limited.
“7 Beyond was established as a joint venture media production company in November 2013 to develop new programming for production in the North American market. The Los Angeles based Joint Venture is in the production of series 11 of “My Lottery Dream Home” for HGTV. Other credits include “Tiny Food Fight” (Facebook Watch), “Holiday Gingerbread Showdown” (Food Network), and “Hip Hop Houdini” (Fuse).
7B has a large slate of pilots in production and is in advanced stages of development of a number of programs including the US version of “Pooch Perfect”,” Beyond said.
SSUK, based in the United Kingdom, is currently producing an 8 x an hour primetime series of “Pooch Perfect” for BBC One. “The format, which was created by the SSUK team, has already been produced for the Seven Network in Australia and a US version is in advanced development. The SSUK team was also recently commissioned to produce a series of “My Lottery Dream Home International”, a 7 Beyond original format, for HGTV (USA).”
“BEL acquired the international format and finished programme distribution rights for reality competition series “Pooch Perfect” from Seven, including the UK and Australian versions of the programme,” Beyond said.
The deal leaves Seven West with international sales of Home and Away (still the big international earner), My Kitchen Rules and House Rules. The sale was hinted at in Seven’s half-year results released in February.
Beyond did not give any financial data on the transaction. Beyond investors didn’t like the deal and the shares slumped 82% on Friday (much more than the 0.6% fall in the wider market) to close at 56 cents.
Meanwhile, Nine Entertainment Co on Friday warned of a slight decline in underlying earnings for the June 30.
Nine pulled its full-year earnings guidance in March because of the “rapid progression” of the crisis, which has since led to the biggest advertising slump in more than two decades.
Nine revealed the downgrade in a short release on Friday about the resignation of the company’s chief financial officer (because of a death in the family).
Nine said that it expects underlying earnings to be between $390 million and $410 million (subject to auditing), a decline of between 3 percent and 8 percent from the last financial year. Net debt is expected to be around $300 million compared to $120.7 million in the 2018-2019 financial year.
Before the pandemic at Nine’s half-year financial results, the company said it expected to report full-year EBITDA ‘at a similar level’ to the previous year. At its annual general meeting last November, Nine had anticipated “low single-digit” growth.
Nine shares eased 0.3% to $1.37.