Seven West Media reports net loss of $745m as Pacific Magazines’ revenue falls 16.5%

Seven West Media has reported a net loss of $745m for fiscal year 2017, a $929m turn around from last year’s net profit of $184m.

EBITDA (earnings before interest, tax, depreciation and amortisation) was $306.7m, down from $363.5m in the prior corresponding period. The company expects EBIT to fall 5% for FY18.

The company’s total revenue was down 2.8%, to $1,679m from $1,726m the previous year.

Redundancy and restructuring (significant items) costs increased by 177% to $20.8m.

One of Seven West Media’s major areas of loss was Pacific Magazines, which reported annual revenue of $168m, down from FY16’s $201.2 (-16.5%) and EBIT fell 61.5% from $9m to $3m.

Lack of advertising spend and small circulation numbers were indicated as reasons for the decline. Pacific Mags’ cost-out programs reduced operating expenses by $28.9m.

However, digital revenue from Pacific Magazines climbed 26.3% to $16.8m.

The results come two months after Pacific Magazines said it would axe all but three of its 22 subbing roles, as it looked to reduce its cost base.

It follows on from Pacific Magazines’ cuts to the sales team in November last year, following a commercial re-structure, which proposed a ‘total network approach.’

Total revenue for Seven West Media

Seven West Media said investment in ‘new, more efficient publishing systems’ and ‘key supplier contracts’ would allow the business to deliver more premium content.

Looking at Seven’s television assets, the company’s revenue was up 1.7% to $1281m, however EBIT saw a 14.4% fall, to $249.7m from $291.7m.

According to the report, Seven West Media’s digital growth – which excludes joint venture Yahoo7 – climbed 102%.

Total revenue for The West fell 4.8% to $217.5m, with advertising spend a major contributor to the decline – down 11.9% to $127.8m.

The past 12 months saw significant changes in The West, with the acquisition and integration of The Sunday Times and PerthNow in November 2016.

Yahoo7’s share of net profit after tax was $5.3m, down 39.8% year on year.

The results come two months after Seven West Media announced it would launch its own long-form catch-up video service under a new agreement with Verizon. 

Tim Worner did not get his bonus this year, with remuneration ‘earned’ at $2.740m, down from last year’s $3.195m.

Worner has been in the headlines since December last year, after details of an affair and subsequent legal battle with former staffer, Amber Harrison were released.

Seven West Media’s legal battle involving Worner (pictured) ended last month

He was cleared by Seven West Media following an independent inquiry, however Seven West Media’s shares fell $100m during the scandal. 

Harrison lost the legal battle in late July, and was ordered to pay all of Seven’s legal costs. She subsequently spoke to media and said she would not foot the bill, however this week she launched a GoFundMe campaign in order to attempt to cover the costs.

Worner, managing director, and chief executive officer of Seven West Media said the results reflected “a tough market”.

“Despite these tougher conditions, we continue to lead in the core markets in which we compete, while at the same time making the necessary and sometimes difficult decisions in the transformation of our business.

“On the financials, our underlying EBIT was within guidance provided at the announcement of our financial results for FY16. Operating costs continue to be a focus with operating costs down $20 million (excluding Olympic Games, license fees and third-party commissions).”

He said the company still maintained its place as dominating broadcast television, reporting its 22nd consecutive half year of ratings and revenue leadership.

“We also expanded our leadership in content creation and distribution across new delivery platforms with over 45% share in live streaming and AVOD catch-up revenue,” Worner said.

“We have continued to invest in creating our own content and we are growing our productions business globally, delivering a further 11% revenue growth in the year.

“The West has successfully integrated The Sunday Times and PerthNow into the business and has rapidly improved the digital offering of the business. Pacific, which has faced material revenue pressure, is accelerating its transformation. We are also investing in new business where we’re leveraging the power of our assets to help growth with very pleasing results,” he added.

Worner expects the broadcast metro market will outperform FY17, despite “challenging” advertising conditions, and Seven West Media’s revenue from its proprietary-owned digital products are projected to double again.

The company’s target is to create an additional $50m in cost savings in FY17 from one-off events to be delivered in FY19 versus FY18.


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