Shares in Seven West Media (SWM) took a significant hit recently, dropping to a record low of 14 cents. This decline was a result of the company’s earnings falling by a staggering 69 percent for the year ending in June. As a result, shareholders will not receive a dividend for the ninth consecutive year. Despite this setback, Seven’s total TV revenue share actually increased by 1.7 percent over the year, reaching 40.2 percent. This growth helped offset the decline in the overall market, as the company achieved share growth in every quarter.
While the full-year costs were up by 2 percent, the costs in the second half of the 2024 financial year were actually lower by a significant percentage compared to the previous corresponding half-year. As the market had time to absorb the initial shock, the value of SWM shares briefly saw gains, reaching 16.5 cents on August 14, representing a 6.5 percent increase. However, despite this slight recovery, the SWM share price remains down by 59 percent over the course of 12 months.
Seven West Media is comprised of various entities, including the Seven Network and its affiliate channels, 7two, 7mate, 7flix, and 7Bravo. Additionally, it operates the broadcast video-on-demand platform 7plus, along with online sites such as 7NEWS.com.au, the nightly.com.au, and perthnow.com.au. The company also owns several newspaper titles, including The West Australian, The Sunday Times, and 19 regional publications in Western Australia.
The decline in earnings for SWM was primarily attributed to falling advertising sales, as well as one-off charges totaling $44 million. These charges included restructuring costs and write-downs of the value of TV programs. Overall, the company’s revenue dropped by 5 percent to $1.42 billion, reflecting a decline in ad bookings across all of Seven’s channels, which is consistent with the broader TV industry.
When excluding the one-off charges, profit still fell by 46 percent to $78 million, while operating earnings before significant charges declined by a third to $187 million. However, earnings at the Perth-based newspaper The West saw a marginal increase of 1 percent, reaching $172 million. Nevertheless, operating earnings for the publication fell by 13 percent to $27 million.
CEO Jeff Howard acknowledged that FY 2024 was a challenging year for SWM in a difficult market. He also expressed doubt that the $650 million reduction in free-to-air television advertising spending would ever be fully regained. In response, the company plans to take decisive action to improve performance by increasing its cost-cutting initiatives and focusing on capturing a greater share of available dollars in each market. SWM aims to achieve this through an emphasis on digital revenue performance and the inclusion of digital rights in new cricket and AFL sport contracts for FY 2025.
To support these efforts, SWM intends to implement a cost-cutting program that will result in a decline in costs for FY 2025, ranging from $1.2 billion to $1.21 billion. This program builds upon the approximately $60 million in cuts that were previously announced across the business.
In addition to these financial challenges, Seven West Media has faced a series of scandals. One former employee alleged that the company had paid for drugs and prostitutes to secure an interview with Bruce Lehrmann. However, Seven denies these claims and asserts that it has terminated individuals whose behavior did not align with the company’s values. More recently, the ABC’s Four Corners program broadcasted an investigation alleging longstanding sexism and bullying at the network.
The Seven West Media Annual General Meeting is scheduled to take place on November 7, 2024. This meeting will provide an opportunity for shareholders and stakeholders to address these challenges and discuss the company’s plans for the future.
