‘Be careful. People like to be told what they already know....

‘Be careful. People like to be told what they already know. Remember that. They get uncomfortable when you tell them new things. New things. well new things aren’t what they expect. They like to know that, say a dog will bite a man. That is what dogs do. They don’t want to know that man bites a dog, because the world is not supposed to happen like that. In short, what people think they want is news, but what they really crave is olds… Not news but olds, telling people that what they think they already know is true.’ Terry Pratchett, Through the Character Lord Vetinari , In the Truth


@Sparktastic You seem to be uncomfortable with understanding the new things that are happening at SWM and across the Total TV industry in general (Your wildly incorrect statement that 7plus 'hasn't produced meaningful results' despite it already earning $134m in EBIT proves this)

So lets not introduce any 'new things' that could challenge your worldview and instead lets investigate your faulty reasoning about linear tv.

Your bearish thesis about SWM is wildly incorrect because amongst other things you fundamentally misunderstand the market economics of linear tv in Australia. You’ve used the example of Channel Ten marking down the value of its TV License and made the statement that ‘Personally, I think we'll have to see significant consolidation in the FTA TV space. Australia can no longer support three commercial TV networks, all with seperate studio & transmission networks. Ten will go first. Whether this is through an amalgamation or parent Company bankruptcy, only time will tell.’

So you are bearish about SWM because a weak competitor is rapidly losing market share and profits during an ad market recession and this in the words of the prior SWM CEO James Warburton is having the effect of ‘ It becoming a two-player market’ aka a duopoly.

It would pay for you to understand that Channel Tens market share losses quite literally are NEC and SWMs market share gains. Both SWM and NEC now have approx. 40% each of the linear tv ad market thanks to the ever-shrinking market share of Channel Ten.

As quoted in the B&T article https://www.bandt.com.au/its-becoming-a-two-player-market-warburton-responds-to-shareholders-as-seven-announces-31-profit-drop-amid-difficult-ad-market/

‘In an earnings call held after the investor presentation, Warburton didn’t hold back in criticising Network 10, saying that the television market is now becoming a “two-player race” with the third player “quickly evaporating” in terms of its market share.’

You clearly don’t understand what a duopoly is nor what happens to the market economics (specifically the pricing power) of SWM’s linear tv business when the Australian linear tv market turns into a duopoly. For an example take a look at Coles and Woolworths.

Only the truly stupid would suggest that the weakening of a third player in the grocery market (such as Aldi) would result in lower financial returns for the two remaining incumbents (Coles/Woolworths)

This below case study explains the economic benefits of a duopoly. (Which is already just the cherry on top of what is the actual 7plus ‘digital transformation’ at SWM that you refuse to acknowledge. )

https://unit.org.au/impact-of-duopolies-on-the-australian-economy-a-case-study-into-colesworth/

So @Sparktastic, in summary what you’ve basically surmised in your investment thesis is that people should sell SWM shares while they trade at 1.5x mid cycle earnings (3x current earnings) which is the lowest price SWM shares have traded at since the Covid-19 pandemic lows!
BECAUSE
1) You intentionally ignored the entire digital BVOD business of 7plus which pulls in $134m in EBIT for SWM and is growing consumption at 39% per annum and instead you made the wildly incorrect statement that ‘The ‘Digital Transformation’ , once hyped as the future of TV and radio in this country, hasn’t produced meaningful results'.

2) A weak competitor in the old legacy linear broadcasting business (Channel 10) wrote down the value of its linear TV License and you think they might go out of business thereby turning this legacy linear broadcasting business into a duopoly in which SWM and NEC are able to earn even higher financial returns.

@Sparktastic You are plainly wrong but it will take until later this year for you to figure that out. By September 2025 SWM will have delivered multi-bagger returns- if you want to take the other side of that bet then please go short SWM and keep us all updated on the results.