Q&A with Seven CEO James Warburton: Where to from here?

Seven is facing a tough 2020 and needs to turn around its programming, financial position and the perception that it's in serious trouble. Here, Seven West Media CEO and managing director James Warburton talks to Mumbrella about shaking up the Big Bash League, the network's hunt for a new chief content officer, if ratings really matter, and if he has a Plan B should the Olympics be canned in the wake of the coronavirus.

James Warburton
, CEO and managing director, Seven West Media (JW)
Vivienne Kelly, editor, Mumbrella (VK)
Hannah Blackiston, senior media reporter, Mumbrella (HB)

VK: Are you guys considering whether there’s a Plan B should anything happen with the Olympics and coronavirus, or are you just confident that that’s going to go ahead as planned?

JW: Look, you know, I think we take information from the World Health Organisation , the IOC [International Olympic Committee] and the AOC [Australian Olympic Committee], and they’ve come out with a very strong position, which is there is no need to delay or cancel the Olympics in any way. So that’s the way that we’re preparing, and from that perspective. There’s obviously a lot of Olympic qualifier events and those types of things. They’ve had trials either in China or Japan or other areas – the marathon was cancelled this weekend or something.

But there’s absolutely no thought around that at this particular point in time.

Seven is confident Tokyo 2020 will go ahead as planned

VK: You talked a lot on the investor call about tentpole programs and getting your 7:30pm Sunday to Thursday up to scratch. With the figures that My Kitchen Rules has been pulling, what do you put that down to? Is it a failure of the marketing campaign? Is it people tiring of the format? What do you think happened there?

JW: I mean, I think the first signal is that it declined 26% year on year, in terms of 2018 into 2019. It’s a very, very tough time slot up against Married At First Sight. It’s very, very tough from that perspective. And I think, there’s probably some fatigue in cooking formats, and Masterchef was down a similar level, so there’s some fatigue in cooking formats. And certainly my thinking arriving at the network looking at what was commissioned heading into the year was to completely reinvent – I couldn’t have been more honest in terms of inward, all the stuff I said at the Upfronts.

And so, we need to completely reinvent cooking, which is what we’re doing with Plate of Origin out of the Olympics.

Warburton (with new Seven recruit Sonia Kruger) knows he’s got a tough job ahead of him

Look, it’s [MKR] season 11, and obviously, there’s a core audience for it. It’s sat at about the same number. It’s sat at about that 500,000 number. It hasn’t gone up, it hasn’t gone down. It’s sat at about that number all the way through, so far in the first two and a half, three weeks. So, it is what it is.

We’re more focused on what we’re rolling out – Pooch Perfect next Thursday. We’re derisking those programs. It’s six episodes. It’s actually derisking that, versus something that’s got to drive 20 or 30 episodes to drive your schedule. So we’re using the schedule from that Sunday to Wednesday is effectively your tentpoles that are in there, and then obviously you’ve got Wednesday and Thursday, and we’re derisking those and the amount of episodes that we’re doing – so whether that’s Farmer Wants a Wife, Pooch Perfect or whatever it is.

Will The Farmer Wants A Wife survive into 2021?

The difficult thing with programming is that it’s very hard to get formats up. So if you look at all the formats, no network ever produces something to fail, but it is obviously a very difficult market and difficult format. And particularly when you’ve got something as established as Married At First Sight.

VK: And Nine won the ratings year last year, but Seven is still doing well in the revenue share. So what do you think that is, that there hasn’t been a direct correlation there, with you slipping in the ratings, but revenue share still being ok?

JW: Well it comes down to a couple of things. But winning the ratings is a notional view. 6pm ‘til midnight, total people does not translate to what drives premium and what drives audience.

So I think there’s two parts to it. One is, everyone’s talking about MKR, but if you look at [Monday] night, the news was the number one program, that goes for an hour. We had Home and Away up in the high 600,000s. We had Deal or No Deal close to 600,000. We had Sunrise close to 300,000. We won the entire day time. We were still doing 500,000 to 530,000 at 9:30pm, and then The Latest came on and did about 300,000. So you’ve actually got that whole schedule approach – AFL, cricket – so when you look at the year…

And then I think the one thing people underestimate is Kurt Burnette and the sales team. They don’t sell ratings. They sell integrations and they sell results. So when you look at My Kitchen Rules, House Rules, they’ve already got multiple sponsors on things like Pooch Perfect, Holey Miley and Big Brother. They sell environment and they sell fantastic integration that drives results.

So from that perspective, I think there’s really strong relationships that are driven. So clients don’t look at a schedule and go ‘Well that’s failed, that’s failed’ – they look at what value the network is driving, and I think we’re very focused on that. And I think our guys do a really good job from a relationship point of view.

VK: You mentioned you’re going to be patient with the Prime merger. Is that code for you’re just going to try and wear Antony Catalano down?

JW: I don’t think it’s a matter of wearing Antony down. I think it’s a matter to look at – we’ve got a great relationship with Prime, we’ve got the affiliation deal that goes for a number of years. But everyone has to look at the commentary of Prime themselves in terms of going it alone.

Catalano and Bruce Gordon have stakes in Prime

So, we’ve got a stake, we’ve got some optionality. But we’ve got a very strong focus. But the urgency, everyone talked about ‘Oh geez you’re doing a lot when you arrived’, the urgency of the turnaround, the urgency of what we needed to do, there’s no misconception from me that it was going to be an easy job. We have to transform. We have to completely reset content, which obviously takes time. And we need to do it in a market that was, and continues to be, challenged.

So we’ve certainly got a number of things that we’re balancing on the way through. So Prime would have given us some great synergy, I still think it would have been better for both of us, would have changed the game in terms of one buy and national reach. It would have changed the game for us, and been of benefit to both shareholders, but it didn’t get up. So now we just move on with our other strategies – Studios, Ventures, and obviously for us in terms of a market like this, working down our debt as quickly as possible.

HB: There was a comment in there about you being careful going forward about how much commitment you make to one-off TV events. Is that likely to impact your sport?

JW: It really doesn’t affect the one-off productions. We’ve looked to get as much efficiency as we can out of sport production and those types of things.

HB: I also noticed there was a comment in there about working with Cricket Australia on BBL [Big Bash League] going forward, and maybe revamping what that’s going to be. Are we likely to see some big changes?

JW: So look, Cricket Australia have been a great partner. We’re working with them in relation to the season. And we’ve got some thoughts around what worked, what didn’t. It was obviously a very long season and it went into the Australian Open timeframe. 14 Australian players need to play. So we’ve got some very clear delineation. Things like the IPL [Indian Premier League] are six weeks. So compressing the season, playing it out over the summer – so we’ve got some very, very strong thoughts which we have shared and continue to share with Cricket Australia and Foxtel, because obviously we simulcast with Foxtel, so obviously continue to have dialogue with [Foxtel CEO] Patrick Delany about what we want to see and bringing the entertainment back to the schedule.

Seven has some ‘strong’ ideas on how to improve the BBL

So, Test Cricket was up 12.5%. It was very strong for us. We’ve got an Indian summer this year, which will be huge interest, particularly launching with a Day/ Night Test in Brisbane. And then we’ve got The Ashes the year after. So I think from a cricket point of view, what was a light test tour worked out very well for us, but we’d like to improve the BBL product for sure.

VK: And how’s the hunt for a chief content officer going?

JW: We’re moving in. So [we’re] negotiating with a preferred candidate. But it’s more, it’s probably a slightly different role to a chief content officer, which is more around director of content and audience. That [role] would join the exec team. And we’re negotiating with the final candidate, and we’ll update the market when and if we close that negotiation.

HB: Throughout a lot of the reporting, you’re pretty sure that the Pac Mags deal is going to go through. Is there a contingency plan if it doesn’t? If the ACCC moves in and says ‘no’, are you going to look for another buyer?

JW: Look, I think we’ve just been focused on answering the questions and ensuring that we get through. We took some comfort from the TPG Vodafone decision. This is a very small segment of the market. It’s severely challenged, as is the economy and the ad market generally. And, as I said, it’s not for us to speak on the regulator’s behalf, but certainly with the discussions, we’re confident that it’s all going to get approved.

VK: One final question as we’re out of time. What does success look like for you in a year’s time?

JW: Well I think we’ve set it out on [slide 17 of the investor presentation] in terms of the priorities over the next six months. We’ve set it out for six months and then rolling forward.

We have to continue to transform the model and take costs out. We’ve taken $45m out, we’ve called out another $20m, so we need to continue to evolve the model and be more efficient.

Content is critical for us. So if we could end this year and you could see that there was four or five tentpoles that we could take forward into refreshed content, so shows like Big Brother or Pooch [Perfect] or whatever they are, that would bring quite substantial leverage for us back in terms of being dominant and pushing revenue share.

The other area for us is BVOD [broadcast video on demand]. We’re underweight and under market, [so we’re going to] increase the platform, the product, the library and first-party data by using the Olympics.


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