Revenue for the 12 months to June 24 fell only 2.7 per cent to $1.67 billion, but $988.8 million of pre-tax significant items dragged the media company into the red.
The biggest single hit was a $432.4 million writedown in the value of Seven West’s television licence, but the company also impaired the value of its investments and other assets by $276.4 million and made a $139.6 million provision for its onerous contracts.
Managing director and chief executive Tim Worner said the impairments had been driven by continued challenging conditions and revised growth assumptions.
“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,” Worner said.
The big loss is the second in three years for Seven West, which made a $184.3 million profit in FY16 but lost $1.89 billion the previous year due to writedowns of more than $2 billion – mostly related to its Seven Network TV assets.
There was better news for fellow media company Fairfax, which swung back into the black with an $83.9 million full-year profit on the back of its lucrative real estate classifieds business, Domain.
The media giant’s total revenue fell 4.8 per cent to $1.74 billion as newspaper publishing and radio income continued to decline, but revenue from Domain rose by 8.1 per cent.
Rival private equity groups were interested in buying Fairfax earlier this year but one walked away and the other failed to lodge a formal bid, leaving Fairfax with its original plan of extracting maximum value from Domain by listing it separately on the ASX.
Chief executive Greg Hywood confirmed Fairfax plans to retain 60 per cent of the shares in the separately listed Domain – with Fairfax shareholders taking the other 40 per cent.
“Domain has created a strong platform for revenue growth and is well positioned for a standalone future,” Hywood said in a statement.
Fairfax will prepare a scheme booklet for the separation of Domain by late September and hold an investor roadshow the following month.
Shareholders will vote on the plan in early November, with shares trading on the ASX by the end of that month, subject to regulatory approval.
Fairfax said it is already recruiting new Domain board members and that Nick Falloon will be chairman.
The relationship between Fairfax and Domain will be similar to that between media rival News Corp and ASX-listed property advertiser REA Group.
Meanwhile, Fairfax’s bottom line for 2017 was a big improvement on a year ago when writedowns, including to its media operations, dragged it to a $772.6 million loss.
Metro media publishing revenue for the 12 months to June 25 fell 9.0 per cent as the 21 per cent rise in digital subscriptions failed to offset a 17 per cent decline in advertising revenue and another drop in print circulation.
Costs at flagship titles including the Australian Financial Review, Sydney Morning Herald and The Age declined 12 per cent following newsroom redundancies.
The decline in revenue and earnings meant Mr Hywood received just 20 per cent of his maximum short-term incentives but still earnt total remuneration of $2.38 million including shares and rights – down 13 per cent on 2016.
Hywood said revenue for the first six weeks of the current financial year was about 4.0 per cent lower than the same time last year.
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