Kerry Stokes’ fortune is around $320 million poorer this morning, after his 66% controlled Seven Group Holdings revealed it had cut the value of its 32.5% stake in Seven West Media by a rather large $483.5 million.
The size of the write-down means Seven Group joins the likes of Fairfax Media ($2.98 billion), News Corp (around $US2.8 billion) and APN ($NZ485 million; $A320 million) in the pantheon of mega impairments in the Australian media sector in the current reporting season. All up that’s well over $6.7 billion of losses for some of the richest people in the country.
But the Seven Group’s loss on Seven West was offset by a profit $129.8 million recognised on the sale of Vividwireless to Optus and the reversal of $66.6 million in respect of Consolidated Media Holdings. They totalled a handy $196.4 million which helped Seven Group avoid what could have been an embarrassing loss or tiny profit.
On an after-tax basis, these significant items cut net profit by $166.5 million, according to Seven West. Given the company reported a profit of $165.9 million in the year to June, it’s likely that without the profit from the sale of Vividwireless and News Ltd’s bid for Cons Media (which allowed that $66.5 million reversal of the previous impairment), Seven Group’s profit may have been marginal to nil.
So in some respects, Stokes has the Singaporeans at Singtel (which control Optus) and Rupert Murdoch to thank for the avoidance of an embarrassing loss (after significant items). How ironic. Remember how 11 years ago Stokes railed against Singapore/SingTel controlling Australian defence communications satellites?
Back in 2001 Stokes made a submission to the Foreign Investment Review Board arguing against SingTel’s takeover and criticising “the naive approach to national security”. Times have changed. Singapore is good.
And there’s a further irony: Murdoch and his Australian minion, Kim Williams at News Ltd, will deliver a swag of cash later this year to Stokes with the takeover of Cons Media, which will see Stokes get around 24% of the $1.9 billion on offer from Rupert. Remember again how Stokes spent $200 million or more taking News, Foxtel (and through them the Murdochs), Nine and others to court in the C7 Pay TV case in the Federal Court?
The bid for Cons Media will deliver around $400 million to Seven Group and Stokes. That should leave him handily in front and with some more play money. Perhaps to take Seven West private?
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