Seven West Media

Seven West Media releases financial results for the financial year ended 26 June 2021

Summary

  • Underlying Group EBIT of $229 million, up 141% year-on-year
  • Net debt reduced 40% to $240 million, now at a leverage ratio of 0.95x
  • The metropolitan free-to-air TV advertising market rebounded strongly, up 25.8% in 2H21 and up 11.5% in FY21
  • Seven’s digital revenue grew 78% year-on-year, driven by BVOD market growth of 55% and five percentage points in share gains during the year
  • $200 million gross cost and cash savings actioned
  • Operating expenses declined 7.5% to $1.02 billion (excluding depreciation and amortisation)

Overview

Seven West Media Limited (ASX: SWM) has reported a statutory net profit after income tax of $318 million on group revenue of $1,276 million. Underlying net profit after tax (excluding significant items) was $125.5 million, an increase of 240% on the previous year. Underlying EBITDA of $253.9 million and EBIT of $229.1 million increased 105% and 141% respectively versus the prior corresponding period.

Seven West Media has made significant progress in its transformation strategy, repairing the balance sheet, making the necessary changes for the business to capitalise on a market recovery, and positioning the business strongly for the future.

Seven West Media Managing Director and Chief Executive Officer, James Warburton, said: “Our result today reflects the material progress of the changes made over the past two years.

“Since 2019, we have increased EBIT and grown our digital business to over 25% of earnings. We have a new entertainment schedule that is increasing ratings across all key demographics. We were the only network to grow commercial audience share across the key demographics in the financial year, which has set us up strongly to monetise this in FY22. At the same time, we have slashed our net debt position by 57% since FY19, giving us a balance sheet to pursue future growth opportunities.”

The results from the Olympic Games Tokyo 2020 clearly demonstrated the reach and scale of the Seven West Media platform across TV, publishing and digital. During the 17 days of the Olympics, television and digital coverage reached 20.2 million Australians, with a record- breaking 4.74 billion minutes streamed on 7plus.

Mr Warburton said: “The evolution of the digital and data side of our business has been a core element of our transformation strategy and the results are clear. 7plus revenue grew 78% in the financial year, outstripping the BVOD advertising market growth of 55%, and 7plus now has 9.2 million registered users. Seven’s digital earnings in FY21 were $60 million, up 131% on the previous year.

“A landmark milestone achieved this year was our commercial agreement secured with Google and Facebook, which was first in market and reflects the quality and value of our news content.

“WAN has grown its audience across print readership and digital, increasing circulation and subscription revenue while also transforming the cost base,” he said.

“We have reignited the Seven West Ventures strategy, with several new investments underway, and the portfolio increasing in value by 11% to $56 million.”

Details

They have done incredibly well to turn this around. It’s a good news story for the company considering where they were two years ago.

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James Warburton said SWM would be keeping Seven Studios, as it now basically produces two shows: Home and Away, and Better Homes and Gardens. He also said that the company effectively lost $50 million from its Tokyo Olympics coverage despite writing record revenue from advertisers.

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Record ratings at Tokyo helped turned SWM’s fortunes around.

Good they’re keeping Seven Studios, that can effectively be turned around too with the right strategy and team behind it.

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When they mentioned partnerships with SVOD platforms does that mean they will produce shows for them through Seven Studios?

They still don’t have a SVOD platform which is pretty poor for a major media company in this day and age so hopefully any partnerships with SVODs will be a meaningful one.

Agree. It is only or the things they are really lacking.
I think the partnerships they have announced will hopefully enable them to finally build that.
They followed suit after Nine signed their deal with Adobe last year and practically did the same

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Seven executives: “Can’t beat them, so we’ll join them.” Playing catch up as always in recent times.

If they could become a content creator for the likes of Netflix then they will thrive. The best outcome is still a SVOD platform but the market’s too crowded now so they might as well team up with an existing one and work with them from a content perspective which is the 2nd best outcome.

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Making content for other platforms will not only provide additional income for SWM but also generate much needed jobs for local producers, actors and crew. A win-win.

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Agreed as well some great distribution which means the studio will get a nice return.

They’re making Back to the Rafters for Amazon, if that proves successful maybe it’ll open some doors for them.

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Surely it’ll be 7Peacock?

Comments Warburton made in the Mediaweek interview JohnsonTV linked to very heavily suggest that’s their plan (emphasis added):

The thing you don’t want to do is be a local player and counting on someone renewing your contract. If you are a local player waiting on a renewal you are dead. As we showed with the Summer Games it is about having a partner.

There are a number of people we are talking to. The market will consolidate as it can’t withstand all the streaming services.

The first bolded quote is no doubt a shot at how reliant Stan has been (and still are) on their various US network agreements.

And Stan have NBCUniversal/Peacock content. If Seven were to partner with NBC universal and launch a 7Peacock service then 9 would have nothing much for Stan given all major studios are accounted for.

From memory Stan only have a deal with NBCUniversal/Peacock for 12 months, maybe less now?

Stan can still have a deal with MGM can’t it?

May not be called 7Peacock but 7+ certainly should pick up the Peacock library and adopt their tier system.

Aren’t Comcast and ViacomCBS partnering on international streaming markets?

Amazon bought MGM I’m pretty sure.

I think in Europe yes not sure about Aus/NZ.