SYDNEY — Kerry Stokes’ troubled Seven Network Australia will attempt to renegotiate key Hollywood programming pacts.
Just days after Julian Mounter, Seven’s third chief exec in four years, quit after only seven months in the job owing to clashes with Stokes over the pace of restructuring at the troubled web, Stokes told media analysts Thursday he was jetting to Hollywood next week to try to trim some of Seven’s costly programming pacts with Fox, Disney and MGM, as well as Universal, which is moving from CanWest-backed Ten to Seven next year.
Speaking of the deal with Universal, Stokes, who controls 33% of Seven’s stock, told analysts that “the outcome of that agreement is a matter of discussion.”
The move to trim Seven’s programming expenses — estimated at A$320 million ($208 million) — comes only a fortnight after struggling cabler Cable & Wireless Optus completed a series of programming pact rejigs that shaved $55 million off its Disney Channel fees and $165 million off movie deals with Warner Bros., Disney and MGM.
Slashing costs by $20 mil
In Stokes’ first briefing to analysts since becoming the web’s exec chairman last Friday, he said Seven’s costs would be slashed by $20 million this year and that Seven would be divided into operating units for broadcasting (which he would head) and non-broadcasting. Steven Wise would run the latter, which would include multimedia and production joint ventures.
A restructuring team is expected to accelerate Seven’s move out of sprawling studios in Sydney and Melbourne and to outsource more production.
A pact for Seven to become a possible equity partner in Melbourne’s Docklands Studio with Paramount, Crawfords and Television and Media Services has been inked.
Many analysts note that Seven has promised lower costs for four years.
Instead, while rivals have trimmed costs in an environment of tight advertising revenues and looming costs of going digital, Seven’s costs have blown out and profits are forecast to slump from $53 million to $26 million. As a result, Seven shares are trading at $2.78, when even Stokes agrees they should be at about $4.
“The difference (this time) is that I’m going to do it,” Stokes told analysts. He’ll do “whatever it takes,” he added.
“At the end of the day, no one likes to stand up and tell people they are going to lose their jobs, but when times demand that action, someone has to stand up and do it.”