EXECUTIVE SUMMARY This paper describes the current position of Seven West Media for the past three years and also shows the forecast of the company for financial year 2012. This would help investors and researchers to decide on investing to SWM or not. SWM has been analyzed step by step in order to find out its true value in the industry. The analysts have first looked into SWM business and strategy where it has been noted that SWM was a result of merger of seven group holdings and Australian West Newspaper in order to expand and use their resources efficiently. Secondly, SWM accounting policies and procedures have been analyzed where they showed that the company is following the accounting standards and using their flexibility that was given by the standard in order to measure some accounts in the financial statement. This flexibility was compared to the industry where it has noted that the company is valuing these accounts in a proper way. Thirdly, a financial analysis was also undertaken. It has been understood that the company, though there was a merger, is managing their resources well that resulted to positive book and cash returns. Lastly, the forecasts of the said company, where the analyst has determined the company’s value and the full set of financial statement for 2012, were estimated and calculated intelligently. With the help of the four steps of business analysis, the group has recommended that it is safe to invest to seven west media even if merger has occurred twice in the last three financial year.

I. INTRODUCTION
In order for a business to stay competitive in the industry, an effective business analysis must be undertaken. This involves gathering variety of data from different sources to be able to make forecasts, trends, strategic and operating improvements, and make wise business decisions to get a better company. This will also help investors in deciding whether they would or would not invest in a certain company.
An in depth business analysis was taken by the researchers for Seven West Media. Seven West Media was the result of the merger of Seven Group Holdings and Westrac last April 2011. Seven Group Holdings on the other hand was also a result of merger of Seven Network Ltd, Yahoo7 and Pacific Magazines last financial year 2010. Seven Network was the main segment of focus in this research where it has been rated as the number one TV network in Australia due to its free trade air.
This paper covers business and strategic analysis, accounting analysis, financial analysis, prospective analysis and recommendation which would help readers understand the current and future standing of seven west media. A number of ratios, theories and estimates were used to be able to come up with an effective business analysis of Seven West Media

II. BODY
A. BUSINESS AND STRATEGIC ANALYSIS
1. Market Overview
Seven West Media is a multi-platform media business that is based in Australia. It was formed by the acquisition of Seven Network, Pacific Magazines and Yahoo7 by West Australian News in April 2011. In addition, Seven Network was merged with Westrac in financial year 2010 to form Seven Group holdings Ltd. SWM is composed of Seven Television (61%), Pacific Magazines (8%), Yahoo!7 (5%), West Australian newspapers and radio stations (26%). The acquisition of Seven Media Group in the 2011 financial year was an important step for the organisation and stockholders. This step has enabled the company to combine their resources and strengths thus successfully bring a bigger diversified market.
2. Corporate Strategy
Seven West Media aims to strengthen and consolidate its revenues from advertising in online, magazines, newspapers and television in today’s tough market. It focuses on growing its revenues and reducing it costs to be the country’s best in the media industry.
Seven West Media goals to bring a quality media that would catch the attention of the most number of viewers in the FTA (Free-to-air) industry and preserve its prevailing market share of the West Australian newspaper market. It is strategically diversifying away from its central brand by capturing the shifting viewer habits of the customers via developing a male demographic for the young ones called 7mate and also for older demographic called 7two.
3. Porter’s 5 forces and SWOT analysis
Seven Network offers a qualitative domestic programs that has attracted a larger share of the advertising market where it has helped the company to grow with its ratings and its number of audience. It has the highest TV rating that it had dominated the FTA industry. It offers free TV, an accessible entertainment, which has captured the largest audience thus advertising dollars will continue to flow in the company. It has the capacity to leverage a variety of innovating media mediums to pull out growing profits for the owners and its advertisers due to its powerful brand. With the new company structure of SWM, it has the opportunity to expand in all types of media thus dominating the industry.
The internet is one of the major threats the company is facing now a days. It has the ability to fragment viewers due to its capacity to give viewers freedom to choose and access a variety of media content. As market gets fragmented, it will be difficult for the company to price a high premium to its advertisers. The innovating technologies like ipad, smart phones, psp and other gaming products, and the likes are also a threat for the company as it divides the viewers to other source of media and entertainment, hence getting less audience and advertisers. The global buying power from Pay-TV which allows user to extract the best media content will result to increasing number of audience at the expense of the FTA industry.

B. FINANCIAL PERFORMANCE
1. Financial Position and expectations
The merger of West Australian Newspapers and Seven Media group has increased Seven West Media’s total statutory revenue by 77.6%. This however is difficult to compare due to the merger of the said companies. The Company has delivered pro-forma EBITDA of $617.5 million and EBIT of $550.1 million on total revenue of $1960.6 million. FTA will add earnings in a cycle and will drive volatility of prices. The company is cutting cost thus advertising condition is expected to be weak for the next two years. With low revenues, margins are contracted at a higher rate due to inherent operating leverage.
2. Growth, Profitability and Financial Health
When advertisers are back after the worldwide financial calamities, it is expected that the revenue growth will be moderate on the coming five years after the abnormal towering return growth. It is expected that margins will pause by FY11 because of tighter competition and softer advertising from fragmented market.
Analysis by Morning Star showed SWM of pitiable financial condition with interest cover of only 3.3x and debt of over $2bn. 3. Risk Profile
A changing preference of viewers risks the TV rating to be fluctuating, hence a risk for the company to retain its dominance in the market.It is expected that over time the global buying power Liberty Media and News Corporation will mean better quality programming and particularly premium sport to dwell on the channels of Pay-TV. Viewers shift to Pay-TV will reduce the profit from advertisement in FTA industry

C. ACCOUNTING ANALYSIS

Accounting Analysis helps analyst use financial information more effectively as it assesses the quality of the financial statement. It is through accounting analysis that analyst understood the flexibility of management in using accounting policies set by the standard where they can make distortions. When this has been understood, it would improve the comparability and reliability of the accounting figures.

It has been understood that SWM is complying with IFRS, Historical Cost Convention, and Critical Accounting Estimates in preparing its set of financial statements. Critical accounting estimates require management to use its judgment in applying group accounting policies. Measuring the recoverable amount of intangible assets and impairment are one of the key areas identified that require a higher degree of judgment, thus susceptible for distorted figures. Comparison with the industy has enabled us to determine that estimates done by the company are within the range of acceptable figures.

1. ACCOUNTING POLICIES

Key accounting policies has been identified in SWM. Accounting policies for revenue recognition, segment reporting, consolidation, foreign currency translation and transaction balances are the major areas that must be taken into consideration.
a. Revenue Recognition: Revenue is measured at fair value where amounts are net of commissions, discounts, returns, allowances and taxes paid. It is recognized when future economic benefit is probable and reliably measured. Revenues are from advertisement, circulation and commercial printing, government grants, program sales, rents, services rendered and dividends.

b. Consolidation: As at June 25, 2011, The consolidated financial statement of SWM incorporates all assets and liabilities of all subsidiaries where they are referred as a Group. On the date control has been transferred to the Group, subsidiaries are said to be fully consolidated. Acquisition of subsidiaries by the group is accounted for using the acquisition method of accounting.

c. Segment Reporting: Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers.

d. Foreign Currency Translation: The functional currency used is the currency of the primary economic environment in which the entity operates. Foreign currency transactions are converted into the functional currency using the prevailing exchange rates at the date of the transactions.
2. COMPARISON OF ACCOUNTING POLICIES WITH ABC (AUSTRALIAN BROADCASTING CORPORATION
ABC has classified for trade receivables, loans and other receivables that have fixed payments that are not quoted in an active market to accordance with AASB 139 Financial instrument: Recognition and Measurement. Similarly SWM using same way and seems there is no gap for any accounting standards and calculation.
Financial assets are assessed for impairment at each balance date. An impairment loss has been incurred for loans and receivables or held to maturity investments held at amortized cost, loss is measured as the difference between ABC is a channel network which provides Radio news, TV channels (ABC1,ABC2,ABC3)Australian networks ,ABC shop.
The carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate same as SWM and depreciation adjusting strait line method form beginning of the period and it has been consistency and reliable.
ABC makes a specific provision for debts considered doubtful by conducting a detailed review of material debtors, making an assessment of the likelihood of recovery of those debts and taking into account past bad debts experience. Bad debts are written off by following Accounting standard.
ABC has classified for financial liabilities as ‘other financial liabilities’ with the respect AASB 139 Financial instruments.
SWM enters foreign currency hedging arrangements to protect its purchasing power in relation to foreign currency exposures. Revenues and expenditures denominated in foreign currencies are converted to Australian dollars at the exchange rates prevailing at the date of the transaction, or at the hedged rate and the same way ABC also entered to the currency hedging arrangement to adjust dollars at the exchange rates.
All gains and losses are taken to profit or loss with the exception of forward exchange contracts that are classified as cash flow hedges used to hedge highly probable transactions. Gains and losses on cash flow hedges held at balance date are taken to equity.
By looking all the main and relative standards to compare with ABC for finding any gap or any risky area for this company which is adjusted by the management to use the flexibility of standard according to entities nature. With respect of standard AASB, IFRS and policies , there is not likely gap for this company.