This week Seven West Media announced its financial year results for 2022, its strongest result in over a decade. The media company reported a statutory net profit after income tax of $211.1 million on group revenue of $1.54 billion.
Its underlying net profit after tax (excluding significant items) was $200.8 million, an increase of 60% from the previous year.
Seven West Media’s report showed earnings before interest, tax, depreciation, and amortisation (EBITDA) of $342.2 million and earnings before interest and tax of $309.0 million. Both increased 35% versus the previous corresponding period.
See More: Seven West Media posts its strongest financial performance in over a decade for FY22
Mediaweek caught up with the company’s managing director and chief executive officer, James Warburton, to discuss the results as well as the future of the company.
With Warburton taking over the company in 2019, this result served as a milestone for the company’s progress. With the debt way down and a solid new slate of content, Warburton is happy with the progress that Seven West Media has made.
“The cost base was fundamentally key to it. Jeff Howard was brought on board as a CFO, who had a lot of experience in terms of stressed balance sheets. Getting to a point where we had the right structure for the business going forward was really crucial and a lot of hard work went into that.
Chief executive officer James Warburton and chief financial officer Jeff Howard
“The second point was pivoting to growth and looking at digital earnings. Moving 7Plus from a catch-up service to making it the market-leading performer in BVOD with staggering growth levels – getting that digital heart into the business and investing in content.
“We brought a lot of new content into the schedule. The spine was always very strong but we brought a lot of the Sunday to Tuesday tentpoles to the network. That got us back to the number one position in the market. To be sitting here and talking about the number one revenue position and to still be leading in the vast majority of those sectors in the markets shows what a strong business we have.”
Going National
A large part of this result and the potential future success of Seven West Media comes down to the company’s acquisition of Prime Media Group. Warburton said that this deal allows Seven West Media to be advertisers’ first stop, due to the number of data points on offer.
“When you start talking to clients with addressable data in 6 billion data points and you’re the nation’s leader in total television, you’re the first port of call from an agency and the client’s perspective.
“We’re starting to see these revenue synergies give Kurt Burnette [chief revenue officer] and his team an unmatched offer in the marketplace. We also talked today of an investment in the CODE7+ which is about optimising our trading platform and being the easiest network to deal with. That’s another really important factor for Seven. The payback on this is quite a significant investment.”
Warburton also said that this deal has had a significant impact on Seven West Media’s content offering, particularly in news.
“From a broadcast point of view, we do 23 and a half hours of news across 55 bulletins, across 20 regions. We’re by far the leader in Australia from a news perspective. When you start thinking about how that pieces together for an advertiser, it’s very clear.”
The acquisition of Prime also allows Seven West Media the chance to expand its digital properties, increasing the reach of products such as 7Plus and 7news.com.au.
“Prime used to cut off any digital promotion for 7Plus or 7news.com.au, so we grew our users by 60% in regional markets and our minutes by 100%,” said Warburton. “The ability to promote 7Plus to another 36% of Australia has been strong.”
The importance of Digital
Revenue from Seven Digital grew 93% in the period to $178 million and EBITDA increased 129% to $139 million. 7plus grew 57% year-on-year in a market that increased 47%.
Warburton said that the company doesn’t see a difference between linear TV and broadcast video on demand (BVOD), considering it all total TV.
“We never really talk individually about Seven or 7Plus, it’s about one result. What you saw with PwC and their entertainment outlook report, previously they thought the market would get to about $900 million by the end of 2025. They have now upgraded that again to $1.56 billion by 2026. That shows how big that market is.
“When you run a network, you’ve got your cap in terms of your inventory that you sell every day – it’s a bit like selling hotel rooms, you either sell them or you don’t. With the BVOD market, you’ve got the broadcast drivers, but then you’ve got the library that continues to grow. The more minutes and engagement that you can get in terms of your audience, there’s a multiplier effect of ad impressions, sell-through rates, paid impressions, and CPM. We’ve got a fantastic opportunity to keep on fueling and keep on loading the engine to keep growing revenue. It’s a very exciting opportunity for television.”
Seven’s Publishing
West Australian Newspapers delivered its best financial result since 2017. Digital growth and the full-year contribution from the digital platform’s revenue were able to offset the decline in print as digital subscriptions and audiences continue to show strong growth. Warburton said that this was a result of a relentless focus on journalism.
“We’ve got a very strong integration between television and newspapers in Western Australia. It is the fastest-growing digital news brand in Australia. They’ve been able to drive pay wall penetration by 43% and they’ve been able to continually attack costs on the overall transformation of the business notwithstanding the increased paper costs rolling through.”
Seven’s on-market buyback
Seven West Media has also approved an on-market buyback of up to 10% of shares on issue.
The on-market share buyback program will be conducted on an opportunistic basis over the coming 12 months.
Should Seven West Media fully complete the proposed share buyback, leverage is forecast to remain within the group’s target leverage range of between 1.0 times to 1.5 times. The buyback will be funded out of existing debt facilities.
Warburton said that this was the right time for a buyback due to companies strong financial position.
“The debt position and our leverage position is the lowest since the formation of Seven West Media, if not for a long time before that. It gives us a lot of opportunities. What was considered from a capital management point of view was the best use of funds, given where the share price valuation has been trading.”