US private equity heavyweight Kohlberg Kravis Roberts late Tuesday offloaded its remaining $260 million stake in television to newspaper interest Seven West Media, bringing to an end its 6-year involvement in Australia's media sector.
The sale of the 12 per cent stake in Seven West Media came just hours after Seven named broadcasting veteran Tim Worner to take over as chief executive's from current boss Don Voelte on July 1. But Mr Worner insisted cost cutting will remain the priority at Australia's most successful media group given the uncertain advertising outlook.
Mr Worner, who currently heads the group's market-leading television network Seven, said his challenge will be to maintain the cost-cutting program under way "while maintaining the quality of what we're doing".
The comments came as brokers Deutsche Bank and Goldman Sachs late Tuesday were placing KKR's Seven West shares to institutions at around $2.21 each. This represents a discount to Seven's close on Tuesday of $2.28.
Seven is seeking to maintain its record-breaking 40 per cent plus share of the metro television ad market but Mr Worner indicated this does not mean the media group's content budget was sacrosanct.
"That budget is always subject to review ... I expect that's going to continue," he said during a conference call on Tuesday announcing his appointment.
Seven West's executive chairman, Kerry Stokes, said Mr Voelte made it clear when appointed CEO nearly a year ago that his tenure was going to be short and this change was made at his recommendation.
"When Don joined us he had a very specific brief to bring on the management ... over the last few months, he has indicated to the board he felt he has done as much as he can achieve," Mr Stokes said.
Mr Stokes praised the contribution made by Mr Voelte, the former head of Woodside Petroleum who many considered an unorthodox choice for the role of media executive. "He has brought what I had hoped he would, which is a business discipline to a media outlet while still allowing us to be creative and achieve those things we set out to do," Mr Stokes said.
Mr Voelte, who was a Seven West director before being appointed CEO, will become deputy chairman of the media group after stepping down from his executive role.
Earlier this month, Mr Voelte unveiled further cost cutting and a new direction for the media group, directing it away from a reliance on advertising revenue towards a strategy to monetise its relationship with its viewers and create new revenue streams from its content.
Implementing that strategy will now fall to Mr Worner.
"He's the right man for the job. He is an outstanding executive and has played a key role in Seven's success," Mr Stokes said.
"Tim's intimate knowledge of the creation of content provides him with the experience to ensure Seven West Media's continuing success as the company evolves, grows and meets the challenges of a changing consumer market."
Mr Worner's base salary will be $2.6 million but he could earn up to $5.2 million in cash and shares each year if he meets short and long-term incentive targets.
Mr Worner said he would be announcing a replacement to run the Seven Network shortly and did not rule out external candidates.