Seven West’s profit slumps sharply, as it eyes AI deals

Seven West Media has endured a dramatic half-year profit slump, and blamed an industry-wide downturn in the advertising market as a major factor.

Seven West chief James Warburton. Picture: Britta Campion

Seven West Media has endured a dramatic half-year profit slump, with an industry-wide downturn in the advertising market a major factor in the soft returns for the Kerry Stokes-controlled company.

SWM’s revenue fell to $775m, from $814m (down 4.8 per cent), in the six months to the end of ­December, while its net profit plunged 52.6 per cent to $54m.

Group earnings before interest tax, depreciation and amortisation was $124m, from $205m (down 39.4 per cent).

While the decline in the TV advertising market is not expected to pick up until the fourth quarter of the current financial year at the earliest, chief executive James Warburton on Tuesday sought to dwell on the growth of Seven’s BVOD platform 7Plus, which saw its “viewing minutes” soar by 35.5 per cent year-on-year.

“VOZ (the new industry TV ratings model) shows the power of the BVOD platform, but also, our audiences on our linear platform have grown as well,” Mr Warburton told The Australian.

“We continue to believe in the power of television and firmly believe that the total TV industry is set to regain market share. Total TV is now growing, and Seven is leading that growth.

“More people are watching TV than ever before.”

Mr Warburton said the company was well placed to capitalise on its strong audience growth when the advertising market picked up.

“We don’t have a crystal ball but in terms of advertising dollars, TV is always the first to go, and the first to come back,” he said.

“We feel pretty good about Q4. There seems to be a line-up of a number of categories, particularly around automotive, banking and finance that seem to be trying to restart their markets which have started to slow down. Any form of positivity to the market will bring money back to our sector.”

Net debt for the company increased to $257m (up from $249m at June 30 last year). In November, Seven West bought a 14.9 per cent shareholding in ARN Media.

Asked about the company’s persistently low share price – it slipped a further 11 per cent on Tuesday, finishing the day at 24.5c, down 3c – Mr Warburton, who will depart the company by the end of the financial year, said while he thought the company was undervalued, its “investments are in the right places”.

“We are well capitalised, have growing audiences and revenue share, and have significant upside for growth as we pursue our digital future,” he said.

Chief financial officer Jeff Howard, who will replace Mr Warburton later this year, said Seven was seeking “direct engagement” with AI platforms with regards to compensation-for-content deals.

“We think there’s a really important point to be made here around government policy,” Mr Howard said.

“Collectively the industry creates a lot of content and it’s essentially being used for free by other organisations to power the development of their platforms.

“They’re taking advantage of our content so the industry … needs to get compensated for that.

“There has been industry discussion about … whether to work collectively or individually. If industry worked together it might produce a better outcome but if not everyone wants to play, we’ll go it alone.”