Seven’s owner announces massive job cuts as TV earnings drop

Southern Cross Media, the business created from the merger of Kerry Stokes’ Seven West and radio group Southern Cross, announced a profit downgrade and massive job cuts as market conditions continue to deteriorate.

The cuts were foreshadowed by this masthead on Wednesday.

Southern Cross said its businesses “are performing well in market conditions that have deteriorated materially more than anticipated” through the current quarter, with revenue and earnings both expected to be below previous forecasts.

The company said it has now commenced another significant cost-reduction program to deliver annual run-rate cost reductions of up to $150 million upon its conclusion, largely through the loss of 250 to 300 jobs – mostly from the TV side of the business.

Southern Cross Media also owns radio networks Triple M and the Hit Network as well as digital audio platform LiSTNR.

“We must reset our cost base to meet current market conditions and capture the full benefits of scale across our trusted platforms for our audiences and advertisers, now and into the future,” Southern Cross chief executive Rohan Lund, said in a statement to the ASX.

“Unfortunately, this means saying goodbye to some talented colleagues who have helped build our business. We are deeply grateful for their contributions, and we are committed to supporting them through this transition.”

Even with cost cuts already delivered from the merger, the group said it now expects underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of $185 million to $190 million, compared with the previously advised range of $200 million to $220 million.

Southern Cross also announced $65 million to $70 million in write-downs of legacy TV content, contracts which have not delivered the commercial benefits expected.

Seven said the legacy contract provisions account for the subdued trading conditions and structural changes in the TV advertising market which reduces the direct and indirect benefits likely to be derived from a range of its legacy content contracts.

Southern Cross said the cuts will primarily impact “mid- and back-office and corporate staff, as well as non-labour costs” and is being carefully managed to limit disruption to clients, audiences and continuing employees.

The cuts and downgrade come just a month after Lund, a former executive at Seven West before its merger with Southern Cross, rejoined the business as chief executive officer.

Some staff in the television newsroom have already been informed this week by Seven’s news leadership team that their roles will be affected.

A Southern Cross board meeting on Wednesday approved the job cuts.

A short consultation period for voluntary redundancies at the company’s newspaper division closed on Monday.

Staff at West Australian Newspapers, which includes The West Australian and The Nightly, were asked to register expressions of interest for a number of voluntary redundancies on Wednesday last week.

But the consultation period for those cuts was only five days, and failed to attract enough applicants, meaning forced redundancies are likely to follow at the newspapers.