Seven West Media half year: Profit after tax of $100m, searching for $40m cost savings

‘We are confident in our new 2018 content schedule’

The managing director and chief executive officer of Seven West Media, Tim Worner, has delivered the company’s first half result this morning.

“We have intensified our focus on the core with ratings, revenue and costs the priority,” said Worner.

“The return to growth in the FTA advertising market has been encouraging. With this momentum continuing in the second half, we now expect the TV market to grow in the 2018 financial year.

“We are confident in our new 2018 content schedule, which has already delivered a strong start to the ratings season. 2018 will see us capitalise on our proven ability to grow and deliver strong FTA and online audiences, featuring the 2018 Winter Olympics, the Commonwealth Games in April and AFL. The recent successful launch of 7plus provides us the platform to greater monetise audiences for our content whenever and wherever they want to consume it.

“We have reaffirmed our FY18 guidance issued at the AGM for underlying EBIT to be between $220 million and $240 million.

“We have also announced the temporary suspension of our dividend as a prudent capital management step to retain flexibility post relaxation in media ownership legislation.

“The pace of our transformation is accelerating, as we adapt our model to a leaner, more agile company. We have today announced an increase to our cost-reduction target to $125m over the 2018 and 2019 financial years.

“In FY18, we will deliver $40 million of cost savings, offsetting the AFL uplift and the spectrum charge, which will result in an overall small reduction in group operating costs. In FY19, we are targeting an incremental $70 million in net reductions to group operating expenses.

“The transformation of the group will also be marked by our headquarters moving to our existing premises, Media City, in Eveleigh in Sydney this year. We are all looking forward to bringing our Sydney teams together in our new modern workspace that will foster even greater collaboration,” said Worner.

Result details

Seven West Media reports a profit after income tax of $100.7 million on total revenue of $811.3 million. EBITDA of $176.8 million is up from $170.8 million in the prior corresponding period with EBIT of $159.3 million up from $148.5 million in the prior corresponding period. No significant items were recorded in the period.

Cost Management

Group operating costs (including depreciation and amortisation) decreased 13.8% in the period to $652.0 million. This includes the Rio Olympics in the previous half, uplift in AFL rights and RLWC in the current half and an ongoing focus on cost control.

Pacific recorded material cost reductions, down 26.6% versus the prior half.

Seven West Media outlook

Looking forward, the company announced its strategic goals for the group include:

1. Focusing on the core and delivering stronger ratings and revenue driven by our major events and new programming schedule.

2. Transforming the business model to be leaner and more agile, maintaining our focus on cost reduction, delivering and exceeding the cost savings we promised.

3. Creating, owning and controlling more exceptional content and ensuring we are maximising the return on this investment with the most effective windowing strategy.

4. Driving greater adoption of 7plus and delivering on the product roadmap rollout.

5. Investing in adjacent verticals where we can leverage our audience and brands.

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