Seven claims victory in 'battle for revenue' in latest results

Josh McDonnell
By Josh McDonnell | 19 February 2019
 

Seven West Media CEO Tim Worner has claimed victory for the network in the "battle for revenue" in 2018, stating in its results for the first half of FY19 that it had the highest share of metro TV advertising last calendar year with 39.2%.

Speaking on the company's results, Worner added that the acquisition of the cricket rights "at a lower cost per hour than tennis" had also paid off for its ratings expectations at the tail-end of 2018 and start to 2019.

Despite the claim to victory in 2018, Seven's total TV advertising revenue was down when compared the the same half-year results for FY18, which was in line with ThinkTV's revenue reports last year which revealed the over market was 4.56% lower than comparable revenues for the same six months a year earlier.

Total TV advertising revenue for the six-months leading to December 2018 was $515,893,000, down compared to an amount of $528,719,000 for the same period of the prior year.

"2018 was a truly outstanding year for our TV business. Across summer, Seven grew its share of every key demographic throughout the day and in primetime and we scored a 40%+ share of viewing on 39 days – more than any network has ever achieved," Worner said.

"We expect to be number one in both ratings and revenue in the current Jan-Jun half. We are now broadcasting premium sport every week of the year, and will be for years to come."

Seven also reports a profit after income tax of $85.8 million on total revenue of $798.9 million for the first half of FY19, down $14m on preceeding half-year. Underlying net profit after tax was $91.8 million, down 7.8% on the previous half year.

EBITDA of $161.5 million and EBIT of $146.8 million were down 8.8% and 7.9% respectively versus the prior corresponding period.

Worner said that the business would continue to transform its operating model at pace, driving greater cost efficiencies and increasing group cost out targets. Seven also stated it had "absorbed" the new cricket costs, maintaining a flat cost base in the second half of 2018.

The company also provided an update on its cost out program of $135 million to $145 million across the 2017-2019 financial years, with a targeted net reduction in costs of $50-60 million, after factoring in the new cricket costs, content investment, AFL uplift and spectrum charge.

Seven’s costs increased by 2% reflecting cricket costs with savings skewed to the second half.

The West Australian and magazine arm Pacific recorded cost reductions of 9% and 6.7% respectively. Both The West and Pacific also recorded dips in advertising revenue.

Total prints and digital circulation for The West Australian declined by 5.6%, while Pacific saw an improved circulation, up 33% year-on-year, now representing 30% of total ad revenue for the business.

Worner also said the business was continuing to see growth in its alternative revenue streams, such as its broadcast video on demand (BVOD) platform 7Plus and production house Seven Studios.

“Just over a year after launch, 7Plus is surpassing our expectations and had the number one share of commercial FTA BVOD viewing in the final quarter of 2018," he said.

“Seven Studios continues its strong upward trajectory, with EBIT on target for a seventh consecutive year of growth. Our shows are now engaging audiences around the world, with a slew of shows debuting on Netflix in the half to global acclaim.”

Seven ad rev H1 FY19

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