Investors fear Seven's star is fading

While Seven has outfoxed Nine and Ten in both ratings and advertising share in the past year, the market was shocked by the extent of the extra costs of its programming and expressed fears that Nine's ratings phenomenon The Voice might mark a dimming of Seven's dominance.

After falling 16 per cent when the market open, Seven West shares slid further in the last hour to end the day 86? lower at $2.91, levels last seen in October 2011. It was the first trading day since an earnings downgrade on Anzac Day eve.

The lower than expected full-year earnings forecast of $460 to $470 million could drive up the group's gearing levels, a Goldman Sachs analyst, Christian Guerra, warned.

Seven sources denied speculation that any advertisers had sought "make goods" - extra advertising slots - after the success of The Voice led to poorer than expected showing for some of Seven's programming.

A Morgan Stanley note to clients said: "A number of its major shows which go head-to-head with The Voice have viewers down a hefty 30 per cent to 40 per cent on previous corresponding periods, for example Dancing with the Stars (1 million versus 1.5 million), Australia's Got Talent (1.1 million v 1.6 million), Packed to the Rafters (1.1 million v 1.8 million). If viewership levels don't recover, advertisers may seek to be made good. That would hurt Seven's ad market share."

In downgrading Seven West, Morgan Stanley warned the group had "very high operating leverage" and "high financial leverage ... which leaves it vulnerable to a prolonged downturn in advertising markets and/or sudden shifts of TV market share against it". Nevertheless, Channel Seven has an advertising share of about 40 per cent, compared to Nine's nearly 32 per cent and Ten at 28 per cent.

Elsewhere in the media sector, Fairfax Media shares fell 2? to 70?, the Ten Network fell 0.5? to 81?, News Corp shares rose 2? to $18.90, and APN fell 2? to 80?.