Seven West Media took a risk in the first three months of 2021, as part of a rebuild of prime time tentpole entertainment, that didn't pay off.
CEO James Warburton, giving a trading update, says Seven launched several tried and tested international formats in 2020 with significant improvement in ratings and demographics for the network.
But the first quarter of calendar 2021 was the riskiest period.
"We launched Holey Moley and Ultimate Tag, two untried formats," he told analysts during a briefing.
"Holey Moley did well for us but faded quickly and Ultimate Tag was an outright failure.
"However, since April our tentpole performance -- with Dancing with the Stars and Big Brother combined with a dominant spine of Seven News, Home and Away, Better Homes and Gardens and the AFL -- has seen a fundamental turnaround in the schedule.
“We’re winning and winning well.”
This means, says Warburton, a trifecta: Winning total people; winning ages 25-54; and winning BVOD for Seven Plus.
“And of course, ratings lead to revenue and revenue share," he says. "A reminder that every share point is worth $21 million to the bottom line.
“When you look at the first 24 weeks of the calendar year, we have won 12 and we're on track to win the 13th this week. That compares to last year and the same period when we had won just five.
“As we head into the second half of the calendar year, we're extremely confident of our content. It's known it's tried and tested.
"We have a full schedule to take us all the way through the year. The Olympics are on and they'll be huge. We then have The Voice, Australia's Got Talent, SAS Australia and Big Brother VIP."
Seven West Media reported a strong rebound in advertising revenue in the three months to June.
Advertising revenue, including BVOD, is estimated to grow more than 45% in the quarter compared to the same period in 2020, during the depths of the economic fallout from the pandemic.
The group now expects underlying EBITDA (earnings before interest, taxes, depreciation, and amortisation) to be between $250 million and $255 million in the year to June compared to analyst consensus of $235 million to $245 million.
Net debt at the end of the 2021 financial year is expected to be between $240 million and $250 million.
"In 18 months, net debt is down by more than $320 million, says Warburton.
"Given the strength and position, we'll be aiming to refinance that debt facilities later this year and provide the group with far more flexibility going forward."
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