Stokes poised to exit 17 years too late for shareholders

OPINION: Kerry Stokes is virtually untouchable in Western Australia. He is close to the government, the fourth richest person in the state, and a patron of philanthropic giant Telethon.

Mr. Stokes’ success began with TV antennas, then shopping malls, and eventually hit the big time with a variety of majors, now called SGH, that the founder handed over to his son Ryan to handle in his twilight years.

It can be said that he has the Midas touch when it comes to business. Almost.

When Mr. Stokes took to the stage at Seven West Media’s last annual meeting in November, he portrayed the company as a victim of foreign digital giants and a regulatory framework that had failed to keep up.

This was a position at odds with the confident image he usually projected.

The message was all too familiar: Global platforms have siphoned billions of dollars from Australian media; governments must intervene; Local companies need to be protected from digital raiders.

It’s an intriguing narrative, but history complicates it. Nearly 16 years ago Mr Stokes made the opposite claim when he set out to take control of then-independent media player West Australian Newspapers.

The 2008 shareholder pack distributed during that campaign shows Mr Stokes and his deputy Peter Gammell positioning themselves as a duo uniquely equipped to navigate the digital transition.

They argued that the current WAN board lacks the vision, technical literacy and urgency required of an industry being reshaped by online audiences and new advertising models.

The promise was clear: Messrs Stokes and Gammell would stem the decline in circulation, rebuild the master franchise, modernize digital operations and invest for long-term growth.

They argued that WAN was starved of resources and only new leadership with deep media experience like theirs could restore performance. Their case rested on a single claim: They understood the digital future better than established companies.

It is now possible to judge this claim. In 2008, WAN’s share price traded between $10 and $17 at the height of takeover speculation. Looking further back, it was trading between $5 and $6 per share over the long term.

In the weeks before the ASX suspension on Christmas Eve, the merged Seven West Media entity (a combination of the same WAN assets and Seven Network) traded between 12 and 14 cents.

The decline in shareholder value is extreme. A hypothetical investor who bought at $10 saw approximately 98 percent of his capital evaporate.

Dividends, once the main justification for WAN’s conservative strategy, are gone. It was stated that minority shareholders were treated “degradingly” at this year’s General Assembly.

Digital disruption is the determining factor in this decline.

But Mr Stokes’ insistence in 2008 that he had a roadmap to overcome this disruption is difficult to reconcile with the reality of 2026.

The company, which had to be revitalized under his stewardship, is now one of the most troubled businesses in the Australian media sector.

The digital platforms that Mr. Stokes once held up as examples have now become the villains of his narrative. The structural pressures he warned WAN to be prepared for have not been meaningfully offset by investments.

This does not diminish the severity of the global forces facing traditional media. Nor does this suggest that WAN’s previous board would have performed any better. But this underscores a very important point: Mr Stokes wanted control of WAN on the basis that he and Mr Gammell knew better than anyone how to manage this transition.

The results are now clear. The comeback never came. The strategy failed to overcome the disruption. The Yahoo7 joint venture was a flop. And shareholders who backed the promise of renewal have absorbed one of the most significant destructions of value in modern Australian media history.

Compare this to Nine’s performance, which faces exactly the same headwinds. Nine built Stan, which is now worth between $700 million and $1.2 billion.

Nine also merged with Fairfax, which founded and launched online property portal Domain. Nine’s remaining Domain shares were sold in October for approximately $1.4 billion, the majority of which was paid out as a special dividend to shareholders.

The separate Nine and Fairfax businesses were valued at about $5 billion in 2013. The combined businesses now have a market capitalization of $1.75 billion. That’s not a great result, but SWM’s numbers make it look remarkable.

Meanwhile, SWM acquired News Corp from its holding in Community Newspaper Group. And bought it Sunday Timeseffectively tripling the number of newspapers.

It later acquired Prime Media Group, which owns regional TV licences. And it started in 2024 Nighty, A digital-only newspaper targeting readers in the Eastern States.

SWM’s share price is about one-twentieth of what it was a decade ago.

Mr Stokes now leaves Seven West Media with a familiar call for government protection. In hindsight, WAN shareholders should have sought protection from the Seven raiders in 2008.

Some, like the corporate shareholders who sided with Messrs Stokes and Gammell and gave them the control they sought, have no one to blame but themselves. But consider the shareholder who asked Mr Stokes a question at the last AGM.

The retiree spent $1 million to purchase 200,000 shares that are now worth just $24,000. He was practically begging for the dividend to be restored, even if it was only half a cent per share.

Mr. Stokes’ response? “I didn’t have a dividend either. So I sympathize with the shareholders.”

The AGM was among Mr Stokes’ final engagements in his capacity as SWM chairman. The company’s upcoming merger with Southern Cross Media Group is scheduled to be completed this week and will mark the end of his tenure in the role.

The Stokes family will retain about 20 percent of the expanded company, and Mr. Stokes plans to remain close to Southern Cross Media Group as a special adviser to its board after the merger.

• Worked for the writer Western Australia It owns a small share of shares issued by employees between 1998 and 2012 and currently at SWM.