In a week when workplace culture has been under the microscope, and fresh off the back of two weeks of Nine’s Olympic reign, Seven West Media has announced its financial results for FY2024.
Amid a punishing ad market, the numbers are not good.
SWM Managing Director and Chief Executive Officer, Jeff Howard, said: “FY24 is a tough result for SWM in a challenging market. While growth in audience and revenue share partially offset the impact of the weak market, cost growth of 2% contributed to our EBITDA decline of 33%, reflecting the operating leverage in our business. Following delivery of $25 million of cost out initiatives in 2H, we have taken decisive action to materially increase the program into FY25 to give SWM a platform to drive improved performance.
“The continued weak economic environment contributed to an 8.2% decline in the total TV advertising market on FY23. SWM was able to partially offset this decline by increasing our revenue share of the total TV market to 40.2%. This share growth was built on the targeted content investments made. The Group was able to partially offset these investments through the implementation of $25 million of cost reductions in the 2H under the program announced at the FY23 AGM.
“SWM continues to deliver market leading content across our linear and digital platforms that engaged and grew audiences during FY24. We achieved solid growth in our BVOD audience during the year, but we are still to fully capture the revenue opportunity.
“We are committed to driving improved profit and cash flow irrespective of market conditions. Despite the advertising environment, we are focusing on capturing a greater proportion of available dollars in each market including a step change in our digital revenue performance. FY25 revenue will include the benefit of digital rights under the new cricket and AFL sport contracts. We have also implemented an enhanced cost out program that will deliver a year-on-year decline in costs in FY25.”
SWM reiterated its new operating model announced in June as part of its refreshed strategy in a changing media landscape.
Under the new model, SWM will comprise three divisions: television, digital and The West. While each division will operate as an accountable and transparent profit centre, they will work collaboratively to drive Group revenue, productivity and cost efficiency outcomes.
The new structure will improve SWM’s ability to deliver its digital future which to date has underperformed revenue expectations. New leadership will have full control of the total digital value chain, from audience acquisition, engagement and content strategy. They will also ensure our go-to market strategies position SWM to fully address the revenue growth opportunity in the BVOD and broader digital advertising market.
The television business will be focused on maximising revenue, earnings and cash flow notwithstanding advertising market conditions through disciplined cost control, to ensure maximum operating leverage when market conditions improve.
Jeff Howard said: “Our new operating model establishes clear accountability for driving our own financial destiny. We will build a better and more resilient media business that captures the clear opportunity in digital and maximises the financial returns in our traditional businesses. The change in structure and leadership allows us to leverage skills across the business and to embed a performance culture.”
Seven is not alone in the challenging advertising downturn.
Think TV announced Total TV revenue decreased 8.1 per cent for the 12 months to June 2024, while Broadcaster Video on Demand is up 12.7 per cent.
The Total TV advertising market, which includes metropolitan free-to-air, regional free-to-air and Broadcaster Video on Demand but (oddly) excludes SBS, recorded combined revenue of $3.3 billion for the year to June 2024, down 8.1 per cent compared to the same period ending June 2023.
In the June half, free-to-air advertising revenue was $1.5 billion, down 7 per cent when compared to the same period ending June 2023.
Advertising investment in BVOD platforms 7plus, 9Now and 10 Play increased with BVOD revenue up 12.9 per cent to $212 million for the six months to 30 June 2024.
BVOD revenue for the total financial year was $441 million, up 12.7 per cent year-on-year.
Performance by sector
6 months to Jun 24
% change YOY
12 months to Jun 24
% change YOY
Commercial FTA
$1,496,741,401
-7.05%
$3,276,513,605
-8.1%
Metro FTA
$998,108,026
-10.9%
$2,224,170,567
-12.0%
Regional FTA
$286,176,108
-5.1%
$610,905,628
-5.5%
BVOD
$212,457,267
12.9%
$441,437,410
12.7%
ThinkTV CEO Kim Portrate said: “Despite some of the most challenging conditions in recent history, the Australian television industry has shown remarkable resilience. These results reflect a sustained period of adaptation and innovation as broadcasters continue to evolve to meet the needs of advertisers and viewers, ensuring brands remain front and centre within the content Australians watch.
“The sustained growth of BVOD revenue underscores the value advertisers place on premium, brand-appropriate content – particularly when it is supported by the ability to target audiences with privacy-compliant first-party data solutions. The television industry is confident this will drive ongoing investment and innovation as more brands move to a Total TV strategy to maximise their business results.”
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