Home to some of the most popular TV shows, like The Voice, Big Brother and The Morning Show, Aussie media company Seven West Media (ASX: SWM) has had a turbulent year so far as the TV-viewing audience thins out.
In H1 FY23, the Company’s earnings fell by $10 million from $215 million in H1 FY22. Its underlying net profit after tax (excluding significant items) was $123.4 million, a decrease of 4.1% on the previous year.
In the second half, market conditions are set to worsen to mid to high single digits for Seven Media. January and February 2023 were already weaker than the first half due to one-off events.
Though the Company didn’t do too well financially, it did well in cost management.
SWM Managing Director and Chief Executive Officer, James Warburton, said, “Despite some of the negative economic commentary, the market has been relatively robust, with growing demand from our core advertisers. We believe the results we have delivered today are strong, despite tracking against the Tokyo Olympics in the prior year.
“Revenue is relatively flat year-on-year at $815 million; expenses have been controlled tightly despite the inflationary environment, up only 1%, and our net debt continues to decline. We also commenced our capital management program during the half with our on-market buy back.”
To mitigate expenses, Seven West Media has identified $15 to 20 million in savings to offset market conditions partly.
As people took to video streaming platforms during Covid, media houses with a virtual presence had the upper hand. In fact, Seven West Media’s digital earnings have soared from $3 million in the first half of FY19 to $80 million in the most recent period. Today, digital accounts for approximately 40% of group earnings. With Australia’s video streaming market set to be valued at $7.40 billion this year, Seven Media can profit if it executes its online strategy well.
Warburton added, “We’ve been highly disciplined in the bidding for our new sport and content deals, with incremental rights offsetting any increase. 7plus will now feature all content on broadcast with significant upside from the addition of the AFL, Cricket and NBCUniversal digital content rights. Seven’s content pillars with news, live sport and our strengthening entertainment schedule ensure that Seven will continue to be a dominant player in ratings and grow its revenue share.”
In October 2022, Seven West Media entered into a multi-year content agreement with NBCUniversal, one of the world’s leading entertainment and media companies, costing between $45 and $50 million. The deal entails bringing thousands of hours of additional content to the Seven Network and 7plus, creating significant new revenue opportunities. The agreement also enabled the launch of a new channel, 7Bravo, on free-to-air and 7plus.
The Company also completed a new investment in the period in a new disruptive property play, View Media Group, investing $12 million cash and $24 million in media advertising. Its current portfolio value stands at $105 million.
While it suffered financially on most fronts, Seven West Media’s digital arm proved profitable, seeing an over 4% increase in revenue and earnings. However, this is also a very competitive and crowded space.
Alinda is a Business Reporter for The Sentiment
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