‘A tough result’: Seven’s financials ‘reflect the ongoing decline in advertising markets’
Seven West Media saw its net profits plummet by 69% during the 2024 financial year, results the group say “reflect the ongoing decline in advertising markets”.
Fresh off the Four Corners investigation on Monday night, Seven announced on Wednesday that it delivered revenue of $1.41 billion for FY24, a modest 5% drop from the previous year, although net profits after tax fell 69%, with group earnings of $187 million fell 33%, or by $93 million, on FY23.
Jeff Howard didn’t mince words when briefing investors. “FY24 is a tough result for SWM in a challenging market,” he said.
“While growth in audience and revenue share partially offset the impact of the weak market, cost growth of 2% contributed to our EBITDA decline of 33%, reflecting the operating leverage in our business. Following delivery of $25 million of cost out initiatives in 2H, we have taken decisive action to materially increase the program into FY25 to give SWM a platform to drive improved performance.
Jeff Howard
“The continued weak economic environment contributed to an 8.2% decline in the total TV advertising market on FY23.
“SWM was able to partially offset this decline by increasing our revenue share of the total TV market to 40.2%. This share growth was built on the targeted content investments made. The Group was able to partially offset these investments through the implementation of $25 million of cost reductions in the 2H under the program announced at the FY23 AGM.”
Howard said Seven achieved “solid” BVOD audience growth – “but we are still to fully capture the revenue opportunity.” Seven is “committed to driving improved profit and cash flow irrespective of market conditions. Despite the advertising environment, we are focusing on capturing a greater proportion of available dollars in each market including a step change in our digital revenue performance.”
FY25 revenue will include the benefit of digital rights under the new cricket and AFL sport contracts. We have also implemented an enhanced cost out program that will deliver a year-on-year decline in costs in FY25.”
The issue isn’t just hitting Seven. Free TV revealed that Nine, Seven and Ten made combined advertising revenue of $3.3 billion for the financial year, down 8.1% on FY23 – a $250 million shortfall.
Seven’s TV revenue declined by 6% during the year to $1.240 billion, “largely reflecting a 7% decline in advertising revenue to $1,127 million and an 8% increase in other revenue (which includes international program sales) to $113 million.”
Costs of $1.068 billion were 2% higher than FY23 driven primarily by increases in content offset by a year-on-year decline in sport costs, based on major events in the prior year.
Total TV EBITDA declined by 35% to $172 million, “reflecting the impact of lower revenue and higher costs”.
In terms of print, The West performed solidly, with “headwinds in traditional print media offset by digital growth and commercial print opportunities”. The West’s digital platforms now have a collective audience of 4.54 million and generated 59.5 million monthly page views, an increase of 5.2 million page views or 9.6% year-on-year.
Revenue of $172 million was flat on FY23 “driven by commercial printing as well as new sources of digital advertising, including the successful launch of The Nightly.”
The West’s advertising revenue was flat year-on-year and circulation revenue declined 3.0%. Cost growth was limited to 4%, with the increase “reflecting higher labour, material and printing costs associated with new commercial printing work secured, new digital products and CPI increases. Like-for-like costs have been held flat.”
The West EBITDA of $27 million was down 13% on FY23.
Looking forward, SWM’s new model will comprise three divisions: television, digital and The West, which the company says “will work collaboratively to drive Group revenue, productivity and cost efficiency outcomes.”
Howard said: “Our new operating model establishes clear accountability for driving our own financial destiny. We will build a better and more resilient media business that captures the clear opportunity in digital and maximises the financial returns in our traditional businesses. The change in structure and leadership allows us to leverage skills across the business and to embed a performance culture.
Anthony De Ceglie
“SWM connects with more Australians than nearly any other media company. We must embrace the challenge to drive a greater share of advertising dollars in each of our markets while committing to a culture of cost discipline across the business. Our aspiration is to generate solid margins, profit and cash flow through the cycle.”
Seven’s advertising woes will continue in the short term at least – September and October bookings are currently down 4 – 5%, however the group is “expecting revenue share gains in FY25 from digital sports rights” for the AFL and cricket, which kick in November.
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No wonder there’s pressure to keep gambling advertising on TV.
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What was Kurt Bs severance package in the end?
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To “Payout”
Kurt = $ 1,426,209
+ LTI
Page 56 On Annual Report
https://www.sevenwestmedia.com.au/assets/pdfs/4.-ASX-SWM-2024-Annual-Report-14-August-2024.pdf
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