Seven West swings to $1.9b loss on television write-downs

'Very happy to have secured the deal'

"I regard the 30 seconds after a goal (in AFL) as the most valuable screen real estate on Australian television," said Mr Worner who sat on a panel with billionaire chairman Kerry and publishing magnate Rupert Murdoch to announce the historic deal.

"They are very different games in terms of television product, you can't really compare with two and that's why we are very happy to have secured the deal for what we have."

Seven, which owns the top-rated metropolitan television network as well as Pacific Magazines and West Australian Newspapers, agreed to pay $840 million in cash and $60 million worth of advertising to secure 3.5 AFL matches per round for its free-to-air TV channel. The six-year deal will begin in 2017.

Mr Worner put the uplift on Seven's current deal with the NRL at about 50 per cent, versus the 70 per cent some analysts had predicted. Seven shares, which are near to historic lows, were 1 per cent higher at 82.2 cents at 12.44pm AEDT.

Speaking about the $929 million TV licence write-down, Mr Worner said "The board felt [it] was the prudent thing to do given current and recent operating conditions."

"We've got new entrants in the market, we've got pressure on costs and also there's questions around television advertising market growth growth so I think given those factors, and they are recent factors, the board has taken what I believe to be a very prudent decision."

'A compelling argument'

Mr Worner said the write-down, which leaves Seven's TV licence recorded in its accounts at $1.37 billion, underlined its growing calls for the industry's $153 million annual licence fees to be cut or abolished, calls which the government is currently reviewing.

"I think the government has accepted that we do have a compelling argument, hopefully we are at a stage now where it is a matter of when and not if," he said. "I don't want to pre-empt any report but I do feel as though we have a compelling arguments when you look at what these other market entrants are able to get away with."

Seven, which is facing competition for audiences from streaming services, including US giant Netflix, predicts "low, single-digit growth for television, newspapers showing early signs of improvement in trend and a continuation of trend for magazines".

Operating cost growth is expected to remain below CPI (excluding third-party commissions and events) with underlying group earnings before interest and tax expected to be 5 per cent to 10 per cent lower than in the full-year to June 2015.

At its half-year result in February, Seven wrote off $961 million of television goodwill, $65.7 million of magazines and newspapers goodwill and $38 million of magazine and newspaper mastheads and licences.

It said that most of the $2.1 billion impairment for the full year "relates to television goodwill and licences recognised as part of the 2011 West Australian Newspapers/Seven West Media transaction".

Mr Worner said the company was undertaking a review of the strategy it set out in May 2013 and would report back to the market by the end of the year, when it is expected to say more about its mobile strategy. As part of that strategy, Seven launched its live streaming product TV Everywhere on Tuesday beginning with its Sunrise breakfast show.