Seven West Media Limited (ASX: SWM) has provided a trading update, claiming that early indications suggest ongoing positive momentum into the September quarter.
Trading conditions in the fourth quarter of FY21 have been positive, with a strong rebound in advertising revenue compared to last year. Seven’s advertising revenue including BVOD is estimated to grow more than 45% in the quarter.
The start of the 2021 calendar year was the Seven Network’s riskiest period in the schedule, with two new unknown formats which had mixed success. Since April, Seven has been increasing its television audience share year-on-year across key demographics.
Seven has won 12 of the 24 weeks in total people so far in calendar 2021 and is on track to win a 13th week. For the ratings year, Seven has won seven out of 16 weeks so far and is one track to win an eighth week.
With ratings comes revenue: in April, the Seven Sales team delivered the #1 linear TV revenue share. SWM is highly confident in Seven’s schedule for the next six months, with proven and successful formats and Olympic Games Tokyo 2020 and the Ashes Test series.
BVOD consumption continues to grow, with 62% growth in registered users on 7plus year-to-date, compared to market growth of 50.7%. 7plus has secured a 37.2% revenue share in the 10 months to April 2021, a 5.8 percentage point increase on the previous corresponding period.
Digital earnings continue to grow strongly, with Seven digital expected to contribute earnings before interest, tax, depreciation and amortisation (EBITDA) of more than $60 million in FY21, up 130% year-on-year. Digital earnings are expected to more than double in FY22.
Cost control remains an ongoing focus for SWM, with costs expected to come in line with guidance at the lower end of the range. Underlying inflation in the business is running at 1-2% per annum, although there will be incremental costs from Olympic Games Tokyo 2020 and the Ashes Test series in FY22, as well as a full survey year of content compared to COVID-impacted 2020.
The group now expects underlying EBITDA to be between $250 million and $255 million in FY21 including the temporary benefits outlined in the first-half results, compared to analyst consensus of $235 million to $245 million.
Significant work has been undertaken in FY21 to improve the company’s balance sheet. Net debt at the end of FY21 is expected to be between $240 million and $250 million.
Management remains focused on executing the company’s strategic objectives. Further updates will be provided when SWM releases its full-year FY21 results in August.