Lacklustre ad market to impact Seven West Media results

Rachael Micallef
By Rachael Micallef | 2 August 2016

Seven West Media has seen profit slip slightly as it warns a short ad market will see earnings impacted by 15-20% in the coming year.

In its full year results released this morning, the group has reported net profit after tax of $207.3 million, down 0.9% year on year. However that previous year result was further impacted by a $1.887bn loss as a result of major TV writedowns. 

Revenue from ordinary activities reached 1.7 billion, a drop of 2.8% from the previous year with cashflows before interest and tax of $274.7m.

Earnings before interest, taxes, depreciation and amortization (EBITDA) reached $363.5m, down from a prior year result of $407.0m.

However Seven has warned investors that softer market conditions and increased content cost from the Olympics and AFL means its underlying Group EBIT will be down 15-20% in the coming year.

“The advertising marketing remains short, particularly given the impact of the Olympic Games,” the group said in its ASX announcement.

“At this stage, Seven West Media believes the overall outlook for the advertising market over the coming twelve months will see the television advertising market to be flat to down in the low single digits, while the advertising trends experience by the publishing assets will continue in the coming year.”

Seven West Media has assets in television, newspapers including the West Australian newspaper, magazines and subscription video on demand (SVOD) service Presto.

Seven West Media MD and CEO Tim Worner pointed to the transformation of the business and its strong balance sheet as providing “a solid framework for Seven West Media over the coming 12 months”.

“We are now a company delivering content to our audiences, anywhere, anytime,” Worner says.

“We are committed to deriving more value than ever from those audiences. We are also a premium content company and increasingly a digital and mobile delivery company.

“We are transforming our businesses while continuing to deliver market-leading performances.”

Seven cements Google partnership

The results come as the network reveals today that it has done a deal with Google to ensure that any punter who is searching for games content is lead right to Seven. Seven is banking on the Olympics giving it a boost in a tough market with a huge amount of content being launched across its suite of products.


The deals sees the pair create a “unique search experience” which ensures Seven's content is integrated with Google's hub that currently sits at the top of the search engine's results. This means Seven's video highlights will feature amongst event schedules, medal counts and athlete information. 

The “enhanced search experience” will also link to and feature 'The Olympics on 7' app for smartphones and tablets. The partnership will also allow Australian's to be able to see TV schedules for individual events in local time so they can tune into Seven's TV broadcast from Rio.

Seven’s event director, Olympic Games and chief revenue officer, Kurt Burnette, says the coming games will represent the “greatest audience aggregation ever seen in Australian media”.

“The Google search integration is a great example of the new ways advertisers can harness the power combination of Seven and Google. We are creating the content and building our presence on new distribution platforms that will engage our audiences and connect those audiences with our marketing partners.”

Seven's “decade of dominance”

Seven West Media was keen to highlight the performance of television network Seven after it picked up 38.9% advertising share in the metro markets, marking a decade at the top, according to FreeTV data. In addition Seven is the number one channels for total viewers in the 16-39, 18-49 and 25-54 age demographics this calender year.

The network also expects to finish the 2016 ratings season, excluding the Olympics, with a market share than in 2015 by focusing on its content.

Outside of share we've now set ourselves the target of increasing the number of people watching Seven year-on-year,” Worner says. “That's excluding the Olympics and we're not talking about viewing on phones or tablets. We're talking about more people watching Seven this year than they did last year and we think we're a good chance to do it.”

Seven reported EBIT of $291.7m with costs declining 1.6% on the last financial year as a result of operating efficiencies. Revenue for Seven reached 1.3bn.

Worner says new shows including Seven Year Switch, Wanted and First Dates delivered strong ratings for the network and will all be returning to screens next year.




The West saw revenue decline 12.4% to $228.5m and EBIT declined 24.3% to $39.2m, largely as a result of soft economic conditions in Western Australia’s economy. Seven West Media is looking to acquire News Corporation's The Sunday Times newspaper masthead and Perthnow digital products noting that if it goes ahead, it will look to grow both brands.


Magazine publishing business Pacific delivered EBIT of $9.0 million and revenues of $201.2m. Seven West Media's joint venture Yahoo7 delivered total revenue of $91.7m. Verizon recently acquired Yahoo with Seven noting it will have an opportunity before the final completion of the deal to consider options with the new owners.




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