Seven West’s Kerry Stokes out the door; despite TV sports dominance, the market shrugs

Seven West Media (ASX:SWM)‘s Western Australia-based billionaire chair Kerry Stokes has announced he’s walking out the door after earlier this year agreeing to the merger with Southern Cross Media Group (which the company backed up with an SXL-sourced independent report earlier this week).

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That report, commissioned from Kroll Australia Pty Ltd, perhaps unsurprisingly found the merger deal is in the best interests of Southern Cross shareholders – and with SWM’s ‘7’ TV portfolio continuing to dominate the Australian sports scene for the year ahead, that’s probably a pretty obvious conclusion.

But perhaps most interesting – or worrying, perhaps, for investors – is that SWM’s share price didn’t move on Thursday. In fact, as of 1.30pm AEDT, only $7,000 worth of shares had traded hands intraday, which is the kind of illiquidity you see at the nanocap end of the exploration mining sector.

From that, you can deduce one thing: SWM just doesn’t have the sex appeal anymore to garner market interest. (For its part, SXL was down -1.7% intraday on Thursday to 85cps, though it’s having a far better year, up +41% YTD.)

And one then must also wonder what Kerry Stokes is really thinking when he announces his departure. On Thursday, the man’s address was undeniably bullish on the future, but the cynic may argue along the lines of ‘well, he’d say that, wouldn’t he?’

The reality is, as I’ve opined before, Seven West Media is the victim of a changing world where TV and radio just don’t have the same power they used to. Compared to where SWM used to be, Southern Cross is, in truth, picking up Seven West for cheap as chips.

That’s probably not such a blow to Stokes, whose family have myriad interests in the Australian economy, but it reminds us of the fact that mergers and acquisitions are (nearly) always a story of a struggler and an opportunist.

SWM last traded at 14cps.

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