‘Short’ Ad Market Drives Down Profit For Seven West Media

‘Short’ Ad Market Drives Down Profit For Seven West Media
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Seven West Media (SWM) has reported a fall in its full-year profit and forecast a bleak outlook for television advertising over the next 12 months.

This morning the media giant announced an underlying profit of $207.3 million for the 2015-16 financial year – down 0.9 per cent on the previous 12-month period – while its revenue eased by 2.8 per cent to $1.7 billion.

Looking at SWM’s advertising revenue for each of its divisions, Seven experienced a decline of 5.8 per cent to $1.1 billion in FY16, while The West Australian recorded a 16.5 per cent fall to $144.6 million, which the group said was “exacerbated” by current economic challenges in WA.

Meanwhile, Pacific Magazines’ ad revenue dropped 16.8 per cent to $56.5 million, which SWM said was partly impacted by the rationalisation of the division’s portfolio.

On a more positive note, SWM’s advertising market growth in digital continued with an increase of 18.7 per cent, and revenue growth of 55.6 per cent excluding Yahoo7.

“Yahoo7 experienced strong growth in native and video advertising but was impacted by softer conditions in display,” the group said in a statement to shareholders.

SWM noted that the advertising market “remains short, particularly given the impact of the Olympic Games”.

“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 experienced by the publishing assets will continue in the coming year,” the group said.

Seven managing director Tim Worner said the group was confident that the diversification of its content delivery would ease the impact of the weak market conditions.

“We expect the group’s 100 per cent-owned digital revenue to grow more than 150 per cent in the year ahead as we continue to build our digital future,” he said.

“Our strong balance sheet, our focus on efficiently managing our businesses and driving new opportunities for growth, in particular in the creation of content, provides a solid framework for Seven West Media over the coming twelve months.”

Mr Warner added that while the TV market has been going through a rebasing of its share of total advertising spend, SWM expects this trend to slow over the coming 12 months and return to growth.

“That’s what’s happened in the UK and the US. The power, reach and effectiveness of television is unmatched,” he said.

Mr Worner said the advertising industry is now conceding that it has “overdone the swing away from traditional media, especially television”.

“As an industry we’ve failed to promote ourselves effectively, focusing instead on competing intensely amongst ourselves,” he said.

“We recognise this and we recognise the need to do something about it. The new industry body, ThinkTV, is now promoting television very aggressively and you will see those efforts stepped up even further in the next few months.”

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