Advertising cuts and losing Olympics hammers Seven West Media bottom line
Despite slashing jobs the dominant Aussie TV station has fallen deep into the red, buried by declining ad spend and losing the Olympics.
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Australia’s biggest TV network has been smashed as declining advertising revenue and losing the Olympics rights hurt the bottom line.
Seven West Media released its full-year results on Wednesday, days after an ABC investigation reported misogynistic behaviour from senior staff in multiple newsrooms.
Shares in Seven West Media and parent company Seven Holdings Group had dipped since the ABC reporting on Monday, but Wednesday’s financial results saw early bounces in both equities.
Before tax profit fell 65 per cent to $67m at Seven West Media this past financial year.
Statutory net profit after tax slipped 69 per cent, to $45m. Revenue decreased 4.9 per cent. However, traders were buying in early trading on Wednesday, with the share price rising more than 6 per cent in the first hour.
“A softer economic and advertising environment and an evolving media landscape have challenged traditional media business models,” chairman Kerry Stokes writes in the results.
“We call on the federal government to support the domestic media industry in maintaining a fair and equitable playing field, by compelling foreign-owned operators to fully comply with the Australian regulatory environment.”
Owner of Facebook and Instagram, Meta, announced in March it would not enter into new agreements with media companies to pay for news, following the end of contracts signed in 2021 under the Morrison government’s news media bargaining code.
The current government is considering using powers under the news media bargaining code legislation to “designate” Meta under the code, which would force the tech company to enter negotiations for payment with news providers, or risk fines of 10 per cent of its Australian revenue.
With this Meta dogfight in the background, Seven West Media announced a comprehensive restructure and major cost-cutting program earlier this year.
“With this exercise underway, we have had to farewell many staff and senior executives, and we thank them for their dedicated service over many years,” Mr Stokes said.
Newly-appointed managing director and chief executive Jeff Howard gave a nod to staff cut loose as well, saying responsibly managing costs was critical.
“That means making hard decisions … we farewelled some of our colleagues … I would like to extend my sincere thanks to everyone who has left us,” Mr Howard said.
The results flag that advertising declined at a faster rate than the network had forecast. Television advertising as a whole was down 8 per cent, to $3.2bn, for the financial year.
However, Seven West expanded its share of the advertising market, offsetting some losses, and posted its “strongest ever non-Olympics quarter” in that metric.
Channel 7 has paid for and cashed-in on the Olympics since 2012.
But even though the network’s streaming service 7plus saw 39 per cent year-on-year minutes-watched growth, “this audience performance has not translated into revenue performance”, it says in the results.
Television pulled in $1.1bn in advertising revenue, and the West Australian newspaper brought in $88m from ads.
In the first hour of trading on Wednesday, Seven West Media shares bounced 6.4 per cent, up to $0.165.
Originally published as Advertising cuts and losing Olympics hammers Seven West Media bottom line
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