ASX media shares are feeling the effects of the coronavirus downturn despite record numbers of Australians looking for entertainment while stuck at home.
Seven West Media Ltd (ASX: SWM) has taken the axe to staff salaries and warned that redundancies are inevitable as coronavirus puts the advertising market on ice.
Seven slashes salaries
According to The Sydney Morning Herald, Seven has told staff that full-time employees earning between $80,000 and $200,000 per annum would need to take a 20% pay cut and work four day weeks until the end of the financial year. Employees earning more than $200,000 are being asked to take the pay cut, but will still have to work across five days. Employees earning less than $80,000 will not be impacted.
The Sydney Morning Herald reported that chief executive James Warburton wrote in an all-staff email, "we need to make some changes designed to ensure that we can continue to offer employment to as many of our people as possible. Despite all these measures, due to the significant impact to the business, some job losses will be inevitable."
Guidance withdrawn
Seven withdrew its full-year guidance late last month citing a material fall in advertising activity. The suspension of AFL games and the Tokyo Olympics will result in rights payments to Seven being pushed back to reflect revised scheduling. Local productions are also faced with challenges due to travel restrictions and coronavirus issues.
Nine also impacted
Nine Entertainment Co Holdings Ltd (ASX: NEC) also withdrew guidance last month saying the forward ad market was becoming increasingly difficult to predict. Audiences across all key businesses were performing well but the company was very focused on bringing forward cost efficiencies where possible.
Nine is predicting a likely material negative impact on the advertising market from April. Nonetheless, digital streaming services Stan and 9Now are reporting accelerating growth in active subscribers and usage.
Nine's CEO Hugh Marks said, "notwithstanding an expected significant impact on our business as conditions continue to evolve, we are confident that with our enhanced audience position, our mix of assets and the commitment of the Nine team, we will emerge from this period a stronger and more competitive Company."
Advertising and radio under the pump
It is not just television producers that are feeling the effects of the downturn – outdoor advertising and radio have also been impacted.
Southern Cross Media Group Ltd (ASX: SXL) shares are currently suspended as the radio company works to assess its options for dealing with the pandemic. These could include an emergency capital raising or working with banks to seek a relaxation of its covenants. The company has also reduced the salaries of all staff earning $68,000 or more by 10% for six months.
oOh!Media Ltd (ASX: OML) conducted an emergency capital raising last week at 53 cents a share. The raising increased its number of shares from 242 million to 558 million, but will allow the company to reduce its debt to $194 million from $355 million.
