Seven West Media resets after $744m loss

Seven West Media has set its sights on a bigger slice of the booming $5.5bn video advertising market.

Seven West Media chief executive Tim Worner. Picture: Kym Smith.

Seven West Media has set its sights on a bigger slice of the booming $5.5 billion video advertising market as chief executive Tim Worner rode out a controversy-laden year with a pay cut and a new strategy.

The television, digital media, newspapers and magazines company suffered a $744.4 million loss in the year to June 30.

Led by a $436m reduction in the carrying value of its TV licences, Seven slumped from a $184.3m profit in the 2015-16 fin­ancial year courtesy of tepid conditions in the ad market and a massive writedown on its broadcast licences.

Mr Worner opted not to receive any short-term incentive payments for the year, cutting his total pay to $2.74m, from $3.2m in the previous year.

“I feel as though it hasn’t been a stellar year for the company and as such I didn’t ask for a bonus,” Mr Worner said.

Seven endured unwanted publicity during the year after a relationship Mr Worner had with former network executive assistant Amber Harrison was made public in December last year.

Mr Worner and other executives also missed long-term incentive payments as the board reassessed “alignment” of awards.

Shares in Seven West Media closed down 2.53 per cent, or 2c, at 77c, as the wider sharemarket rose 0.44 per cent.

Like other media companies, Seven has written down the value of its assets by hundreds of millions of dollars amid a seismic shift to a digital and mobile ad landscape effectively controlled by Google and Facebook.

Apple yesterday set a budget of roughly $US1bn ($1.3bn) to procure and produce original content over the next year, The Wall Street Journal reported.

Ten Network is currently in receivership and other media organisations are cutting costs and axing jobs to address sharply declining ad revenues.

Corporate chiefs across the media sector yesterday urged crossbench senators to reach agreement with the Turnbull government over its package of reforms.

“We support the federal government’s media reforms, including licence fees being addressed, to enable local media groups to remain strong in the face of increasing competition from various new players,” Seven West Media chairman Kerry Stokes said in the annual report for shareholders.

Of the potential to do deals if the media ownership laws were relaxed, Mr Worner said he did not “wish to speculate on any specific outcomes” if the bill was enacted.

Meanwhile, Seven is doing everything it can amid a heavy regulatory burden to reinvent its business for the digital age.

Dubbed Total Video, Seven’s plan to grow revenue is the next iteration of Mr Worner’s “Anytime, Anywhere” strategy, which lets consumers view TV channels on mobile, catch-up and other digital platforms.

By moving with the audience as they move from the conventional box to new platforms, Seven has been aiming to retain viewers to hold its ground against the rise of streaming services like Netflix.

Seven is increasingly redefining what counts as ad spending, adding in dollars generated from online video to broadcast ad dollars as marketers show more willingness to pull budgets from the once-sacrosanct TV budget to fund digital advertising efforts.

“You only need to look at the explosive growth in digital video consumption, consumers’ screening time and the ubiquitous connectivity that we now all enjoy,” Mr Worner said, noting that seven million Australians now streamed 1.5 billion minutes of long-form content via the internet every month.

“These facts have led our transformation as a content company to better target this total video market and make it such an important part of our new strategic direction.”

As the No 1 free-to-air network and home of hits such as reality franchise My Kitchen Rules, Seven is well positioned to exploit this shift, with marketers only prepared to fund their forays into digital ads at the expense of other budgets if the content is broadcast quality.
Mr Worner said Seven has recently overcome limitations on digital content rights after reworking a joint venture agreement with Yahoo7. Seven is aggressively trying to own as much of its content as possible.

“Those days are now behind us, and we are making big moves in how we will now operate.”

Excluding significant items, Seven reported a profit of $166.8m, down 19.5 per cent from last year’s profit of $207.3m. Revenue fell 2.7 per cent to $1.68bn.

Earnings before interest and taxes amounted to $261.4m, compared with $328.1m in the prior corresponding period.