Seven West Media Limited (Seven Network, the Group, ASX: SWM) is a media business with a presence across broadcast television, publishing and digital. Seven West Media owns the Seven Network, The West Australian newspaper and the digital platform 7plus and 7NEWS.com. Seven Network is the broadcast partner of the AFL, Cricket Australia, and Supercars.
Challenging advertising market in first half-year
Seven West Media recorded a soft six months to 31 December 2024 that reflects the impact of major one-off sporting events in the first half. Seven Network did not have the benefit of advertising revenue from the FIFA Women’s World Cup which it had in the previous corresponding period. In addition, the Paris Olympics, which absorb much of the nation’s TV adverting throughout July and August, were on a competitor’s network. These two sporting events were significant contributors to the 6.2 percent decline in revenue to $727 million in the December half-year. Excluding these one-off sporting events, Seven’s total TV audiences are up 1.5 percent year-on-year. In the December half, Seven Network’s ratings performance translated into a market share at 41.5 per cent share of the total television advertising market. This is the highest revenue share achieved by a non-Olympics broadcaster in an Olympics half.
The AFL Grand Final drove a step-change in audiences as the first half-year progressed. Cricket (Tests and Big Bash League) also helped audience growth in the December half-year.
The Group reported profit before significant items, net finance costs and tax (EBIT) of $71 million, which was down 33 percent on the previous corresponding period. Excluding significant items, the December half-year profit after tax came in at $37.4 million, down 40.2 percent. The Group’s profit to cash conversion ratio was positive with cash flow before temporary and capital items of $52 million. Temporary items relate to cash outflows of $10 million, in relation to one off projects and onerous contracts.
The West Australian newspapers continued to attract higher audiences with the West’s digital platforms now reaching a collective audience of 3.74 million and generating 56 million monthly page views, an increase of 9.6 per cent year on year.
A noteworthy feature of the December half-year profit result is the cost management initiatives implemented in response to the revenue market challenges in the reporting period. Total Group costs (excluding depreciation and amortisation and significant items) in the December half of $634.8 million, were $16.0 million or 2.5 percent lower than the prior corresponding period.
No dividend will be paid in respect of the FY25 half-year.
Trading outlook
High inflation and interest rates have led to a tightening of the short-term advertising market, with clients having less budget available for in-month activity. Advertising spend from supermarkets significantly declined year-on-year. Despite these headwinds, management anticipates a modest recovery in earnings in the second half-year with March quarter bookings tracking higher at low single digits The second half-year performance is set to benefit from, AFL advertising revenue growth and a boost from Federal Election advertising revenue.
Cost guidance remains unchanged at $1.2 billion to $1.21 billion and includes the full year net cost reduction of $20 million to $30 million in FY25, versus FY24.
Medium-term outlook
Seven’s strategy is to focus on acquiring and retaining advertising friendly demographics by bringing the best entertainment, news and sport content to Australian audiences at scale. This strategy consistently applied over the medium-term should enhance Seven Network’s proposition for advertisers.
Every month, Seven reaches more than 17 million people nationally across its broadcast and digital network. Seven’s programming schedule begins each day with Sunrise, which remains Australia’s most-watched breakfast show for a 21st consecutive year. The Morning Show is Australia’s most-watched morning show while Home and Away continues to be the leading Australian drama on free to air.
The Group has also launched its new 7plus AI Factory which provides deep insights into audience behaviour. Advanced data capabilities help predict and engage streaming audiences, unlocking new opportunities for advertising revenue.
The West Australian newspaper continues to transform its business with a focus on driving a greater share of its revenue from digital subscriptions and circulation, through high quality editorial. This focus is delivering continued growth in digital subscriptions revenue.
Seven West Media is a returns focused business that is adapting to the challenges and opportunities in the changing media landscape. The Group’s stated objective is to stabilise and grow earnings and cash flow irrespective of advertising market conditions.
On this basis, shareholders can reasonably anticipate steadily increasing earnings in the second half of FY25 and into FY26 and beyond.
