Seven West Media up on takeover speculation

Billionaire shareholder might be agitating for change

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 9, 2012 3:40 pm AEDT

Shares in Seven West Media Ltd (ASX: SWM) have climbed close to 19% in the last fortnight, on speculation that the company could be subject to a takeover by its largest shareholder, Seven Group Holdings (ASX: SVW).

Seven Group Holdings, controlled by billionaire Kerry Stokes, holds 33% of Seven West Media. Stokes is reported to have been frustrated by the latter's performance since listing.

Despite the recent price rise, the shares are still less than half the price they traded at a year ago. Seven West is the owner of Australia's top rated free-to-air TV network, and the West Australian newspaper and has interests in website Yahoo!7 and Australia's second largest magazine group, Pacific Magazines.

Falling ad revenues have hit the media sector hard, especially print media and free-to-air networks, in the last year or so. Rivals Ten Network Holdings (ASX: TEN) and Nine Entertainment are also struggling. Ten has seen its share price fall 55% over the last 12 months, while Nine seems likely to collapse into the hands of its bankers, under the weight of $2.8 billion in debt.

Newspaper publishers Fairfax Media Limited (ASX: FXJ) and APN News and Media Limited (ASX: APN) have suffered similar falls in their share prices, due to falling ad and classified revenues and structural changes sweeping the sector.

In an effort to boost magazine sales and get consumers back shopping, Pacific Magazines has started a no-charge campaign across TV, online and in magazines, offering free editorial and advertising to department stores David Jones and Myer, and up-market brands such as Burberry, Chanel, Dior and Ralph Lauren.

If the move works, Pacific Magazines could ignite a spark in the advertising market, which would likely benefit all media companies.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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