Seven West Media - The next target?

For those of you from outside Australia, Seven West Media owns an Australian TV station (channel 7) and a large newspaper (the West Australian).  It is heading for a corporate action which means either a takeover, a merger, or administration.  We know, because the share price has been manipulated down over the past year from $1.10 to 40c and we also notice announcements which are playing out as we see across many ASX stocks in a similar rinse and repeat fashion.  

This is how these corporate manoeuvres play out

1) Manipulate the share price down using algorithms. Short sellers don't need to be involved but often are.

2) Ask the CEO to resign just before financial results are released

3)Ask the new CEO to immediately write down the assets and cut the dividend.

4) Cap any share price rise using algorithms

5)  Come in with a takeover offer from a third party at a 30-50% premium to the share price.

6) Directors will recommend to shareholders to accept the offer.  Shareholders can refuse all they want but they are powerless. Quite often one token Director will be against the takeover which just appears to 'look' like the Directors care about the shareholders.

7) Get their shills in the media to tell everyone the takeover is a good deal for shareholders. This way nobody is any wiser about how shareholders have just been dudded. 

In the case of Seven West Media I wrote on social media last week under the Twitter name end_share that they were about to write down their assets and cut their dividend and a few days later they did one of those. Then the share price fell from 40c to 36c.

If a takeover offer does come soon for Seven West, everyone needs to remember that the share price has been manipulated down from $1.10 to 40c prior to all this.  That is not because of world events or problems in the company or a bleak outlook for the future of free to air tv (those were already factored into Seven West's share price) it was as a result of algorithms. A 30% premium to 36c is 47c.  You can see why shareholders complain about all this manipulation.

Another way shareholders can lose is when the company is forced into administration. In many cases this happens without any resistance from the Board who don't care when shareholders lose money. In cases where there is substantial debt it is quite easy for the banks to put the company into a forced administration even when it is not needed.  The company is then given to the administration companies who then sell the company on the cheap to whoever they want.  There are many cases where this has happened unnecessarily such as Arrium.  In the case of Arrium it was forced into administration, sold by the administrators to a new buyer for $750 million who are now planning to list a portion of it back on the ASX for $2 billion a few years later.

Shareholders complain all the time.

After a while of getting no action from ASIC they take it to the next level the Ombudsman. The Ombudsman really has no idea what is going on.  Their job is to get rid of the complaints and that they do it very efficiently. ASIC and the Ombudsman know how the game is played. It is very simple. All ASIC has to do is to give a response, even a non-response will suffice. They have filing cabinets full of non-responses that they can draw on. Just ask someone who has made a complaint. They know what I am talking about. Once you reveal that ASIC has provided a response, then the Ombudsman official will throw their hands up in the air and say that they are so sorry, there is really nothing they can do if ASIC has responded.

It's not unlike holding a royal commission and then doing nothing. The process is designed to allow people to vent. To think that justice is being served.

If the matters presented to ASIC and the Ombudsman and the responses received are given the Reasonable Person Test (RPT) they never 'cut the mustard'. Under a RPT, if any reasonable person cannot be satisfied with the answers provided, then they are worthless.  The tragedy is that reasonable people know the score and don't even bother because it is a futile exercise.

The whole process of complaining to ASIC and then the Ombudsman about these above types of corporate maneuvers are just designed by the Big End of Town to wear people down.  It sends the message, "We are the Big End of Town - Stuff you"

The system has to change!

And lets' if Seven West is taken over or put into administration or merged with another media company.  Either way, shareholders have the right to be compensated.