Channel 7 Faces Profit Decline Despite Matildas Boom

Seven West Media, the owner of Channel 7 has reported a sharp decline in profits for the 2023 financial year, revealing that the ongoing challenges in the television advertising market have taken a toll.

The media conglomerate disclosed an 18% fall in its EBITDA, settling at $280 million, down from $342 million in 2022.

Following the earnings announcement, the company’s share price dipped 7.5%, trading at $0.37 on 16 August. The total TV advertising sector experienced a 7.9% downturn, yet Seven West Media secured a 38.5% share of total TV revenue.

Interestingly, digital platforms now contribute nearly half of the group’s underlying earnings. The growth of 7Digital’s EBITDA was noted at 17%, excluding the Olympics and Commonwealth Games earnings.

James Warburton, the Managing Director and CEO, accentuated the company’s national audience reach. He reiterated Seven’s commitment to augmenting both audience and revenue shares, drawing attention to content partnerships including the AFL, cricket rights (jointly held with Foxtel for this year), and a suite of shows from NBCUniversal.

“The programming slate continues to assert Seven’s dominance, marking our third consecutive year as the top network for national audience share,” Warburton commented.

During a session with investors, Warburton articulated his belief that the Australian television market has become a competition primarily between two major players. He observed a significant decline in market share for a ‘third player’. Hinting at competition, he added,

“While the major two are contending closely, the third appears to be waning.”

In response, a spokesperson from Paramount ANZ countered, highlighting their diversified global reach and imminent launch of Pluto TV. They also drew attention to their recent accolade, having won five TV Week Logies Awards, the highest among commercial broadcasters.

“We understand our competitors would like to see otherwise but we are confident of our unique offering to the market and we will continue to entertain Australian audiences with fabulous locally produced content and through Paramount’s unrivalled global content pipeline.”

Historically, Warburton helmed Channel 10 for a short stint in 2012. While he successfully reversed a flagging share price during his tenure with Seven West Media, dividends for shareholders have been absent since 2017.

Though Seven’s broadcast of the FIFA Women’s World Cup was widely viewed, Warburton indicated that commercial opportunities, especially during the Matildas’ games, were limited. He cited the absence of advertisements during crucial segments of the game.

Addressing the recent loss of the Olympics rights to Nine, Warburton alluded to factors such as time zones and production costs which might not be economically viable for Seven.

On the investment front, Seven West Ventures, the group’s early-stage investment division, has finalised its stake in View Media Group, led by Antony Catalano and Alex Waislitz. This division, focusing on partnerships with consumer-centric brands, now boasts a portfolio worth around $100 million.

Going forward, the group emphasised its digital future investments, seeking efficient strategies and leveraging their robust balance sheet. The media giant also plans to persist with its market share buy-back in the upcoming financial year. However, due to the current market scenario, dividends will remain on hold.

Currently, Seven West Media’s market capitalisation stands at $621.42 million. Financial results from its rival, Nine Entertainment Co, are anticipated next week.