Seven West Media chief James Warburton expects a rebound in advertising
Seven West Media chief executive James Warburton says the downturn in the TV advertising market will be brief.
Seven West Media chief executive James Warburton says the downturn in the television advertising market will be brief, and the company is well placed to capitalise on the expected bounce back.
The Kerry-Stokes-controlled media company posted a 0.5 per cent dip in revenue in its half-yearly results on Tuesday, and a 4.6 per cent fall in net profit, amid wider forecasts of a high single-digit decline in the total TV market over the next six months.
But Mr Warburton said as Seven’s digital assets continued to enjoy strong growth, and with some of the network’s more “onerous” long-term contracts expiring in the coming year, the company would be in a position to generate “significant cash” by FY25.
“If you look at the last 30 years, from the recession in the early 1990s, the September 11 terror attacks, the global financial crisis and the pandemic … in every single case, the market has bounced back strongly,” he told The Australian.
“We feel (the decline) will be relatively short and sharp. There will be a strong recovery, and a digital upside in that recovery.”
Mr Warburton said the company was continuing to slash debt, despite the softer conditions in the market.
“Expenses have been controlled tightly, despite the inflationary environment, up only 1 per cent; and our net debt continues to decline,” he said.
“We don’t have a lot of visibility (in the ad market) – January and February were a bit weaker, but March is tracking a lot better. It’s fair to say that everyone is being relatively cautious in terms of ad spend.
“But a 5 per cent reduction in the total market still represents a 4 per cent growth on 2019.”
Mr Warburton also noted Seven’s earnings from its digital assets had grown from 3 per cent of the media group’s total earnings in 2018, to 40 per cent in the first half of 2022-23.
The Seven boss said securing long-term contracts with top-tier sports such as the AFL and cricket had given the company a strong platform upon which to build over the next decade, while admitting the decision to relinquish the network’s rights to the Olympics was an “easy decision” to make.
Nine announced last week that it had paid $315m for the broadcast and digital rights to the Olympics through to 2032 – a price that Mr Warburton thinks is way over its value.
“It’s not just the rights fee – it’s very expensive to produce the Olympics. It’s about $120m in production, and from a hospitality perspective, it’s anywhere between $30m and $50m … so over a decade it’s close to a half billion-dollar commitment,” he said.
“The Olympics in Paris and LA are potentially the worst time zones for any recent Games, with no gold medal events in prime time. The losses for Seven would have been substantial – blind Freddy can see it would have been an onerous contract for us. It was just not something we were prepared to do,” he said.
Shares in Seven West Media closed at 43c on Tuesday, down 4.4 per cent.
Report on ABC’s ‘doctored audio’ scandal blames lawyers
A report has blamed ABC lawyers for failing to pass on complaints by former commando Heston Russell that extra gunshots had been edited into an ABC news report.
‘Pressure from above’: ABC executive pushed by Buttrose
Christopher Oliver-Taylor was under pressure to sack Antoinette Lattouf after Ita Buttrose made clear she was ‘deeply unhappy’ with action taken on the stand-in radio host, the Federal Court has heard.