Australia’s largest media house, Seven West Media (AU: SWM), announced unexpected top-tier changes today. Managing Director and CEO James Warburton will exit his role at the end of Fiscal 2024. The current CFO, Jeff Howard, will take the CEO post by June 30, 2024. SWM shares are down 2% on the news as of writing.
Howard has steered the CFO’s role since January 2020 and is an apt choice with his vast “commercial knowledge, passion, and commitment” toward the company, said Kerry Stokes AC, chairman of Seven West Media. Meanwhile, the company is on a hunt for a new CFO.
Seven West Media operates a free-to-air TV network called Seven Network. Plus, it owns several newspapers in Western Australia, including the West Australian Newspapers. Additionally, SWM operates a broadcast video-on-demand service called 7plus. SWM shares have been under pressure this year, losing 37.5% of value so far.
The Media Industry Faces a Swarm of Challenges
The TV industry, in general, is facing a setback with declining viewership, lower advertising revenues (down 7.9% in the first half of 2023), and an overall diminishing market size as online/digital streaming takes on a pivotal role. Also, print publications like newspapers have their own set of challenges. Amidst the storm, the departure of a media veteran from the lead role could prove to be costly for SWM. Despite these odds, Seven West has maintained its position as the number-one TV network in Australia three times in a row.
Stokes said that Warburton was instrumental in steering the company through its most difficult times and is leaving SWM in a strong position. This year, Warburton also struck a lucrative long-term deal, winning AFL and cricket TV streaming rights for the company, thus ensuring solid viewership.
Seven West Media is pivoting toward digital offerings, with the segment contributing 49% of its underlying earnings in the first half of 2023. Further, the West Australian news brands witnessed a 22% growth in unique monthly audiences. Looking ahead, SWM is targeting a more than 40% total TV revenue share, growing from 39% in the first half of 2023. It remains to be seen how well the incoming CEO, Howard, will navigate the company in the times ahead.
Is Seven West Media Stock a Buy?
On TipRanks, SWM stock has a Hold consensus rating based on one Buy, one Hold, and two Sell ratings. The Seven West Media share price forecast of A$0.34 implies 40.4% upside potential from current levels. It is important to note that these ratings were given before the CEO exit announcement and analysts could change their view.
