Shares in Seven West Media have dropped to a new record low after it posted a $67 million first-half loss today.
Earlier today shares were down 13.5 per cent to 20 cents, down over 30 per cent from the start of the year.
Managing Director and Chief Executive James Warburton told the market he has been frustrated by deals around acquisitions, including Prime Media, but remains focussed on transforming the company to reduce debt.
“Over the last six months, we have executed on a number of major strategic initiatives, including the investment in our new content strategy for our primetime entertainment schedule which commences in April; a major re-organization and cost out plan delivering $45 million of gross savings; the divestment of Redwave; and proposed sale of Pacific Magazines,” he said.
“The ACCC’s decision on Pacific Magazines is due in April 2020. We continue to work with the ACCC to address their concerns. While management were disappointed that certain stakeholders blocked the Prime Media merger, we have secured a strategic stake of 14.9%. Working down debt remains a key priority with a number of initiatives underway.”
He noted there were strengths outside the current criticism of its 7:30pm tentpoles, whilst acknowledging it presented an opportunity for growth if it found a hit. Amongst those are Seven News, including online, while it sees enthusiasm for the 2020 Olympics with 10 signed sponsors. But he is also looking to cut another $20 million in costs in the second half.
“We will continue to be creative and apply entrepreneurial thinking. My mandate is to dramatically change the business which means transformative M&A opportunities are very much on the agenda,” said Warburton.
“I believe we have the team, the platform and the strategy to transform and grow this business to increase shareholder value.”
The group delivered revenue of $772.4 million (excluding share of associates), down 3.2 per cent on the prior period, driven by ongoing weakness in the broader advertising market.
In Television, the Seven Network was the number one free to air network by revenue share, increasing its share 0.4% pts to 38.8% in 1H20.
7NEWS increased its leadership position as Australia’s most watched news service in 2019, growing viewing share in every market. Seven’s coverage of the most watched Winter and Summer sports in AFL and Cricket continues to be strong, with the AFL audience for the 2019 season increasing by 3 per cent and Test cricket up 12.5%. We are already in discussions with Cricket Australia to review the Big Bash season and product moving forward.
Seven’s content led growth strategy will invigorate its entertainment schedule in Q4 of FY20, bringing several well established, and new and exciting franchises to prime time viewing.
Seven’s digital offerings continue to rapidly scale, with revenue growth of 58 per cent and EBIT growth of 205 percent in 1H20 compared to the prior corresponding period. In the 2019 calendar year, BVOD consumption on 7plus grew 33 per cent. Revenue growth in the BVOD market accelerated in the July to December period, increasing 42 per cent year on year.
The West launched its paywall in the period which is tracking ahead of expectations, delivered $7 million of cost savings and completed the integration of Community News Group. Trends in Pacific Magazines remained consistent with prior periods.
The value of Seven West Ventures portfolio grew 27 per cent to $103 million year on year.