In worrying signs signaling a rocky ad market, Seven West Media has told its investors to prepare for earnings to fall by almost 11 per cent this financial year.
The media company, which owns Channel Seven and is controlled by Kerry Stokes revealed it predicts underlying earnings before interest and taxes for the current financial year to drop to between $210 million and $220 million.
Comparatively, in 2018, Seven West Media earned $235.6 million. The earnings forecast is well below what analysts were expecting, which is around $230 million.
The drop in earnings forecast is interesting, especially considering the recent two elections, which would typically result in an ad spike.
Seven blamed “soft conditions” and the economic uncertainty surrounding the federal election.
Aitken Murray partner John Murray told The Sydney Morning Herald and The Age he wasn’t surprised by the cut.
He said: “I think they had been careful not to reiterate guidance, which usually means they’re going to miss [their forecast].
“I don’t think it has any impact on the longer term outlook for their business, which is very positive.”
In February, Seven West Media reported a 4 per cent drop in half-year underlying earnings to $146.8 million.
According to the company, cost-cutting will be at the top end of the $30 million to $40 million range given at the half-year results.
Seven said it has grown its metro free-to-air ad market to 41.3 per cent, while its share of the BVOD market had hit 42.5 per cent in April.
Last year, Seven secured the cricket broadcasting rights with Foxtel, a deal that was worth $1.2 billion.