Seven’s 40% earnings drop ‘reflects the weakness in advertising markets’

Seven West Media has reported a 40% drop in earnings for the first half of a challenging FY24, with net profits down 49%.

SWM reported group revenue of $775 million for the final six months of calendar 2023, a modest 5% drop on the previous corresponding period.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were $124 million, down 40%, while underlying net profit after tax dropped by 49%, to $63 million.

Seven’s chief, James Warburton, said the company’s financial performance “reflects the weakness in advertising markets,” with the final three months of 2023 particularly weak.

“We continue to believe in the power of television and firmly believe that the total TV industry is set to regain market share,” Warburton said.

“Total TV is now growing, and Seven is leading that growth. Our view that audiences will be attracted to quality and consistent content across news, entertainment and sport is evidenced by the growth in our linear and BVOD audiences for the half year, including a linear increase of 2.2% and a 35% increase in minutes on 7plus.”

“We have grown audience in total people and have grown in four of the seven months so far in FY24,” Warburton continued.

“Our BVOD audience growth has been driven by both live and library content. The FIFA Women’s World Cup 2023™ delivered extraordinary numbers on 7plus and our tentpole programs saw a 36% increase in live minutes watched year-on-year. We are also seeing good growth in our news, with an 18% increase in live viewership on 7plus year-on-year. Our NBCUniversal content now accounts for 16% of our total BVOD minutes and is attracting new younger female audiences as expected when we made this investment.

“Thanks to our audience growth, we were able to record a total TV revenue share of 41%, achieving the number one position in the market, an increase of 1.7 points on the previous corresponding period.”

Warburton notes Seven’s share growth partially offset the 9.1% decline in the total TV advertising market during the period, a market Warburton said is “set to regain market share”. He also points to the recently updated TV ratings measurement system.

“We see a significant opportunity to grow our digital earnings with the recent launch of VOZ finally pushing TV audience measurement into a comparable position versus other media channels,” he said.

“We are also excited by the game changing addition of digital rights for the AFL and cricket later this calendar year; together, they will add an estimated four billion minutes of content a year to 7plus and allow us to capture an estimated 45% revenue share.”

West Australian Newspapers saw its audience up 18.5%, with a 4% increase in revenue, from $85 million to $88 million, “largely attributable to new commercial print opportunities”. Earnings were down 12%, from $17 million to $15 million.

“We continue to be disciplined on our cost outlook,” Warburton continued.

“Costs for the half were in line with our expectation, with the majority of our FY24 content investment weighted to the first half. We are well progressed on implementing our $60 million cost initiative program and are on track to deliver $25 million this year.

“We expect FY24 cost growth to be limited to 1-2%. We will, however, revisit the current cost initiatives program if advertising markets remain weak for the remainder of the year and will act decisively to meet such challenges.

The company’s 19.9% investment in ARN in November is “a meaningful step to position our business to deliver commercial partnership and collaboration with the market leading radio business in Australia.”

The company’s second-half trading update was muted, citing “limited visibility into quarter 4, and expecting further moderation in decline, compared to the current three-month period.

Second half costs are expected to be 4% — $20 – $25 million lower than the same period in FY23.

“We have delivered on the commitments we have made, driving our content strategy to deliver strong operational results across the metrics that we can control, delivering audience growth and total TV market share growth.

“We have also demonstrated financial discipline as we closely manage our costs while investing for the future. Our investment in 7plus and the new Phoenix trading platform will drive user experience, converged audience trading and drive yield.

“We are well capitalised, have growing audiences and revenue share, and have significant upside for growth as we pursue our digital future.”


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