Jeff Howard, the new CEO of Seven West Media, facing a stubbornly soft advertising market, wants a better digital media business and is prepared to take tough decisions to get there.
Seven reported revenue down 5% to $1.415 billion for the year to June. Statutory net profit after tax dropped 69% to $45 million. Underlying net profit after tax, after excluding significant items was down 46% to $78 million.
To meet the downturn, the media group plans to accelerate cost cutting following $25 million of savings in the half year to June. This means a $108 million cost-out program into the 2025 financial year.
And the company’s “organisational restructure” to drive accountability and performance is aimed at ensuring Seven West is “well positioned to meet the challenges and opportunities of the changing media landscape”.
Seven now has three divisions -- television, digital and the West -- with each an accountable profit centre but working collaboratively to drive group revenue, productivity and cost efficiency
“We are already starting to see the benefits of the changes made, and are totally focused on delivering valuable outcomes for shareholders,” Howard told market analysts in a briefing.
Analysts say the TV sector remains challenging from both a cyclical and structural perspective.
“We remain concerned on the sectoral headwinds facing TV given elevated CPMs and competition from SVOD,” said Macquarie analysts in a note to clients.
However, the analysts noted Seven agreed with an increasing industry rhetoric that the TV networks need to be more collegiate in monetising audiences and moderating profit declines.
Brain Han, director at Morningstar, noted that a weak TV advertising market continues to wreak havoc and that Nine's
Olympics telecast isn't a help to Seven.
"However, management delivered on the key metrics within its control," Han said.
"First, audience growth is lifting Seven's share of the total TV advertising market encompassing linear TV and digital broadcast video on demand, or BVOD.
"Seven's share grew to 40.2% in fiscal 2024, from 38.5%, and management is projecting further gains in fiscal 2025.
"This is poised to be driven by the expanded digital cricket rights (from November 2024), digital AFL rights (from April 2025), and management's revitalised 'digital-first' sales strategy (albeit we have heard this buzzword before).
"Second, second-half total expenses fell 4% on cost-out initiatives. Further cost cuts are underway, with two thirds of the targeted $108 million reduction in fiscal 2025 already 'locked in'."
Howard, in his briefing of analysts, said Seven was focusing on driving costs down but maintaining editorial and content quality.
“We've had to make some tough calls but it's necessary to do that in a market that we're in,” he said.
“We haven't specifically targeted any part of the organisation more than any other part. Everywhere has been looked at.”
Howard said the company’s overarching aim is to build a better digital media business, to take “control of our own destiny, to redefine what success means for Seven West Media and then to look ahead”.
“Delivering a digital future is our first key priority in a market that is expected to grow faster than most other media segments, SWM has a huge opportunity position itself as an out performer,” he said
“Seven Plus is a very successful digital platform, and we can do more in the entire digital space to drive growth for swim shareholders.
“At the same time, we will optimise our traditional assets in television and print. Managing cost responsibility is a key focus, as evidenced by the expanded cost out program that we've announced.
“And importantly, a clear ambition is to find new revenue streams and new opportunities for the business.”
Strategy slides from Seven's analyst briefing:
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