Profit plunges at Seven West Media in sector battered by tough ad market

The Kerry Stokes’ backed media company is hurting from a tough advertising market and the impact from major sporting events but there are positive signs on the horizon.

Ryan Stokes and Kerry Stokes at Seven West Media’s AGM last year. Picture: Joseph Lam

Seven West Media has reported its worst ever half-year result, with both profit and revenue taking a hit on the back of a soft ad market.

The Kerry Stokes-backed media group’s net profit slumped 68 per cent to $17.7m for the six months to December 31 as revenue fell 6.2 per cent to $727.3m.

But Seven West Media chief executive Jeff Howard flagged a more positive outlook for the ad market, sending Seven West shares 1c higher to 17.5c, while rival Nine Network also got a boost, rising 18c, or 14 per cent, to $1.47.

On an analysts call, Mr Howard talked about the good momentum being seen in the ad market in 2025. He noted this was the “first time in a couple of years” the media group had seen encouraging signs this strong.

Formerly Seven West Media’s CFO, Mr Howard took over from former CEO James Warburton less than 12 months ago.

In its half-year results, Seven noted that rival Nine Entertainment had drained ad dollars with its broadcast of the Paris Olympics in the December half, while in the previous year’s first half Seven had received a boost from its FIFA Women’s World Cup coverage.

Nine and Seven account for close to 80 per cent of all money spent on FTA total TV advertising, with Paramount’s Network 10 closer to 20 per cent.

“What we are seeing is the sharing of a halo effect between us and Nine,” Mr Howard said. “Between the two of us, we’re doing a very large share of the total TV ad market. That’s coming on the back of the premium audiences we’re delivering and the audience growth we’re delivering.”

Year-on-year earnings before interest, tax, depreciation and amortisation tumbled 26 per cent to $92m in the December half, while profit after tax excluding significant items was $37.4m, down 40.2 per cent. But encouragingly for investors, the ad share for Seven was up 0.5 points at 41.5 per cent, costs were dropping, and the company continued to lower its net debt.

Seven reported an ad share of 39.4 per cent in the first quarter. That climbed to a sector-leading 43.8 per cent in the ­December quarter.

However, it was a winning share in a market that continues to see advertisers drifting away to digital media alternatives. Calendar year ad spend collected by SMI from major ad agencies for 2024 showed TV revenue down 9.5 per cent year on year. Digital and outdoor were each up more than 4 per cent.

The growing audience Seven West reported is the extra 350,000 sign-ups for its BVOD offering. Mr Howard indicated it brings total registered 7plus users close to 14 million.

He also noted when live sport was being broadcast via 7plus, there could be as many as 800,000-plus active users in one day. That number has doubled since securing digital cricket rights.

Seven West Media CEO Jeff Howard. Picture: NewsWire / Martin Ollman

The fall in revenue despite the audience increase indicates Seven may have been too hasty letting former chief commercial officer Kurt Burnette go in 2024. The company recently reversed that decision, employing former ad agency chief Henry Tajer to that role.

When questioned about that appointment, Mr Howard said: “It’s not that we’ve fundamentally changed the strategy.

“Henry brings a unique skill set, reputation and experience to Seven. Henry’s team will continue to have dotted line reporting to both Angus Ross and Gereud Roberts, as heads of TV and digital, respectively,” he said. “It’s an opportunity to turbocharge our performance in that space.”

Commenting on the outlook, the company indicated third quarter ad bookings were “tracking up low single digits” and that it should be able to benefit from AFL growth and the federal election.

Pre-election, Seven noted government spending was up. It anticipates that spending will increase significantly as soon as an election date is revealed.

Growing AFL revenue could be a challenge in 2025 given that Seven has no Saturday AFL for much of the year, with the Foxtel Group having exclusivity for Fox Sports and Kayo customers.

In exchange, Seven gets AFL on Thursdays across the home and away season. “We were conscious of trading Saturdays for Thursdays,” Mr Howard said. “Thursdays are probably a better [revenue] proposition.”

Seven performs particularly well in regional markets. While it sells advertising in all mainland markets, it has an affiliate deal with Southern Cross Austereo for the Seven content in Tasmania.

SCA has been keen to exit the TV business for some time, something the company calls “non-core regional television assets”. SCA signed a revenue-sharing agreement with Paramount for the TV licences for three east coast aggregated markets late last year. However, Seven is biding its time picking up a market it seems would make sense for them to own.

“We’ve been talking to [SCA] pretty actively, said Mr Howard. “Obviously, we have a strong interest in an affiliate deal with Southern Cross. We have a strong interest in what happens there.”

When pushed on any stumbling block, he wouldn’t elaborate, including if Seven West had made SCA aware of its level of interest.

Originally published as Profit plunges at Seven West Media in sector battered by tough ad market