Kerry Stokes’ Seven West Media plans to implement further cost reductions of up to $20 million across its operations in response to a significant decrease in television advertising expenditure.
The ASX-listed media giant, which operates the Seven Network and The West Australian newspaper, informed attendees at the Macquarie Australia conference on Tuesday that it anticipates an 11% drop in the television advertising market during the second half of the fiscal year.
The company has identified an extra $15 to $20 million in temporary cost savings, primarily from content, to counterbalance the downturn. These savings are in addition to the $20 million announced during the company’s half-year results in February.
The lack of spending from major political advertisers and government expenditure on COVID-19 vaccinations and social distancing promotions has also impacted year-on-year revenue.
At the Macquarie Bank conference, Seven West Media reported an 11% drop in the total TV market during the March quarter and projected a similar trend for the June quarter. The media group has pinpointed $15 to $20 million in “new additional temporary cost savings”.
However, Seven’s CEO James Warburton and Chief Digital Officer Gereurd Roberts remain optimistic, citing the TV market’s history of strong recovery. They told the conference that declines and recoveries in the TV market typically result in higher revenue within two years.
In February, when releasing its half-year results to December, Seven West Media announced cost-cutting measures to address the weakening television advertising market.
The media group reported flat revenue and a decrease in profits for the half-year to December. Statutory net profit after income tax was $114.9 million on revenue of $815.4 million, down 0.5%. Meanwhile, underlying net profit after tax (excluding significant items) fell 4.1% to $123.4 million.
At the time, the company stated that early indications suggested the television market might decline mid to high single digits in the half-year to June, but visibility remained limited.
According to the Standard Media Index (SMI) released this week, overall advertising spend fell 5.5% in March.
Source: SMH and AdNews
The FTA Commercial business model doesn’t work any more.
Had the opportunity to get what was needed gratis.
Got to ask who’s been responsible for all the
Persona non grata !
The only way is DOWN.