Seven Holds Off On Paying Dividends, Despite $115 Million Profit

Seven West Media (SWM) has again reneged on its promise to pay a shareholder dividend despite posting a $114.9 million profit from July to December.

SWM, which owns the TV network and The West Australian, posted $814.6 million in revenue in the six months to December. That equated to a decline of 0.5 per cent compared to the prior year. Earnings before interest, tax, depreciation and amortisation fell 4.8 per cent to $205 million.

The company also expects ad revenues to fall mid to high single digits in the half year to June but said visibility was “limited” at this stage. Seven chiefs have identified upwards of $20 million cost savings to offset market conditions.

This morning’s numbers follows yesterday’s news that the media company had reportedly resumed merger talks with HT&E, owners of the ARN radio stations.

In last year’s annual report, Seven listed one of its strategic priorities as “explore M&A opportunities”. That said, Seven said its first priority was to start paying a dividend to shareholders.

Highlights of today’s numbers include:

Number national audience share in CY22 (total people, 16-to-39s)
Total TV revenue share of 39.3 per cent in 1H23, tracking in line with FY23 target
Secured long-term broadcast and digital rights for AFL, Cricket and NBCUniversal
Underlying 7Digital EBITDA growth of 35 per cent (excluding Olympics)
Group EBITDA of $205.0 million, down 4.8 per cent year-on-year
Strong operating cashflow (before interest and tax) of $204 million, up 55 per cent
New venture investment in View Media Group
Reported net debt of $186 million; adjusted net debt at $223 million, or 0.7x net debt/EBITDA

Commenting on the results, SWM managing director and CEO, James Warburton, said: “We have established the dominant national total TV business; we are delivering on share and revenue; and we have a fast-growing digital business that has growth underpinned for the future with major new deals. The big moves we have made in the past six months set the foundations for the network and 7plus for years to come.

“We’ve been highly disciplined in the bidding for our new sport and content deals, with incremental rights offsetting any increase. 7plus will now feature all content on broadcast with significant upside from the addition of the AFL, Cricket and NBCUniversal digital content rights. Seven’s content pillars with news, live sport and our strengthening entertainment schedule ensure that Seven will continue to be a dominant player in ratings and grow its revenue share.

“Despite some of the negative economic commentary, the market has been relatively robust, with growing demand from our core advertisers. We believe the results we have delivered today are strong, despite tracking against the Tokyo Olympics in the prior year. Revenue is relatively flat year-on-year at $815 million; expenses have been controlled tightly despite the inflationary environment, up only one per cent; and our net debt continues to decline. We also commenced our capital management program during the half with our on-market buy back.

“Seven was the number one network across calendar 2022 and won 38 of the 52 weeks.

“That success was driven by our content-led growth strategy, the re-vitalisation of our entertainment content schedule in recent years; our market-leading sport content including the AFL; and the ongoing dominance of 7NEWS, Sunrise, Home and Away and our multi- channels. The latter, of course, became stronger with the addition of 7Bravo last month.

“In the first five weeks of the 2023 calendar year, we had our most competitive start to a year in total people since 2018 in terms of audience share and our best start in 25 to 54s since 2019.

“Our digital earnings have soared from $3 million in the first half of FY19 to $80 million in the most recent period and digital now accounts for approximately 40 per cent of group earnings. The BVOD market continues to grow strongly, up 18 per cent in CY22, even with the Olympics in CY21. We expect our share of this market to grow significantly from the new digital content and sports rights secured.

“In October 2022, we announced a multi-year content agreement with NBCUniversal, one of the world’s leading entertainment and media companies. The agreement is bringing thousands of hours of additional content to the Seven Network and 7plus, creating significant new revenue opportunities. The agreement also enabled the launch of a new, female-skewed channel, 7Bravo, on free-to-air and 7plus on 15 January this year.

“7Bravo has made a positive start and the NBCU content accounted for three of the top 25 BVOD shows overall in the first few weeks of launch.

“West Australian Newspapers continues to execute its strategy of holding the line on print, turbocharging digital growth and reducing costs. The business delivered strong digital audience growth, up 15.9% year-on-year, and digital circulation revenue continued to grow, up 28%. EBITDA declined 11%, which is due to a significant increase in paper costs in the period.

“Seven West Ventures completed a new investment in the period in new disruptive property play, View Media Group, investing $12 million cash and $24 million in media advertising. The current portfolio value stands at $105 million.

“Operating costs have been managed tightly and $15-20 million savings have been identified to partly offset market conditions. Reported operating costs guidance range is between $1.22 billion and $1.23 billion, incorporating the new content deal with NBCUniversal.”

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James Warburton Seven West Media