Seven West Media's woes continue with half-year loss

ASX-listed media giant attributes half-year loss to challenging advertising market

As the half-year results roll in, the news isn’t great for Seven West Media, which reported a loss of $67 million.

The ASX-listed media company reported total revenue was down 3.2 per cent to $773.3 million for the half-year to 28 December 2019. Underlying net profit after tax was $69.3 million, a fall of 22.5 per cent on the previous year, while EBITDA of $136.6 million and EBIT of $119.7 million were down 20.1 per cent and 20.8 per cent respectively versus the prior corresponding period.

Seven West puts the poor results down to a challenging advertising market, with metro free-to-air TV declining 7 per cent and a total advertising market decline of 8.5 per cent. However, the broadcast video on-demand (BVOD) market was up 42 per cent.

Seven West Media managing director and chief executive, James Warburton, noted a number of strategic initiatives executed over the last six months, including the investment in a new content strategy for its primetime entertainment schedule which commences in April; a major re-organisation and cost out plan delivering $45 million of gross savings; the divestment of Redwave; and proposed sale of Pacific Magazines.

SWM is also awaiting the ACCC’s decision on Pacific Magazines, due in April 2020 and Warburton said it continued to work with the regulator to address concerns.

"While management were disappointed that certain stakeholders blocked the Prime Media merger, we have secured a strategic stake of 14.9 per cent. Working down debt remains a key priority with a number of initiatives underway,” he said. 

There are no further details on how SWM plans to cut further costs, but it is almost certain to include more programming and staff cuts.

According to the report, in television the Seven Network was the number one FTA network by revenue share, increasing 0.4 percentage points to 38.8 per cent in 1H20. 7NEWS increased its leadership position as Australia’s most watched news service in 2019, growing viewing share in every market. Seven’s coverage of the most watched Winter and Summer sports - AFL and cricket - continues to be strong, with the AFL audience for the 2019 season increasing by 3 per cent and test cricket up 12.5 per cent. However, flagship reality show, My Kitchen Rules, lost its ratings to both Nine and Ten this season. 

Seven’s digital offerings continue to grow, with revenue growth of 58 per cent and EBIT growth of 205 per cent in first-half 2020 compared to the prior corresponding period. In the 2019 calendar year, BVOD consumption on 7plus grew 33 per cent. Revenue growth in the BVOD market accelerated in the July to December period, increasing 42 per cent year on year.

Seven West hoped to turn this around with both sales and mergers, including the sale of Pacific Publications this year for around $40m, and the subsequently blocked acquisition of Prime Media. It is also releasing a new primetime content strategy targeting 25-54 demographics, and hopes digital coverage of this year’s Tokyo Olympics will attract new viewers and advertisers.

Along with this, it hopes the release of VOZ will assist in proving digital TV’s worth to reticent advertisers.

The news follows Seven’s net loss of $444.4 million in full-year to 30 June 2019. The ASX-listed media giant published its full-year results in August, confirming $1.56 billion in revenue, a 4 per cent dip year-on-year, along with a $129.3 million underlying group net profit, a decrease of 7.9 per cent on 2018.

However, it was the final net loss of $444.4m that grabbed the headlines, a figure resulting from $573.7 million in impairment charge relating to licences, mastheads, goodwill and other intangible write-offs. Seven West Media (SWM) attributed these to softer advertising market conditions across its TV and newspaper mastheads.

Seven West Media recently appointed its first-ever chief marketing officer (CMO), Charlotte Valente, in a move to becoming more audience-centric.

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