Seven West Media AGM: Stokes & Worner on costs and revenue

Tim Worner

“Our competitors do their best to dismiss our achievements by saying our audience is old.”

Addressing shareholders at the Seven West Media annual general meeting in Sydney yesterday, executive chairman Kerry Stokes said:

“I can report to you we have responded positively with a renewed focus on improving our core business with stronger TV ratings, revenue and cost savings.

“This program also demanded that we reduce debt, unfortunately requiring us to suspend our dividends throughout the course of the year.

“However, all of the initiatives have delivered tangible results for you, our shareholders, with the group’s net debt reduced by $90 million from $725 million to $635 million. Meanwhile our cost savings program delivered a net reduction in costs of $21 million, which offset increased AFL rights fees and spectrum charges during the period.

“Despite these necessary cost measures, Seven continues to dominate the television sector, achieving our 12th consecutive year as Australia’s number one TV network, lifting our share of every key demographic segment of the market.”

CEO Tim Worner followed the chairman and continued on the theme of cost management and detailed some of the savings:

“Throughout the year we maintained that firm focus on our costs, driving operational efficiencies, and reducing headcount by 7%. We have outsourced some activities not crucial to our competitive advantage and achieved $61m in savings. When you factor in the AFL uplift and spectrum charge, we delivered a net reduction of $21 million.

“With the mantra of ‘collaborate on technology, compete on content’ we also partnered with our counterparts to launch a joint venture for our respective playout operations. Not only does this deliver savings, it will now provide a new revenue stream.

“And we are currently completing the move of our Sydney teams in Jones Bay to Media City. As this falls within our existing tenancy, it will further reduce costs, as well as foster greater collaboration.

“The West and Pacific also continue to work hard to deliver savings.

“Our new SWM WA CEO Maryna Fewster and her team in Perth are pushing further forward with a cost-out program that reduced costs by 4.4% last year and will achieve at least another $10m in savings in the current financial year.”

In his outlook, Worner first addressed criticism about Seven’s record audiences:

“[This year] we will deliver the biggest share of any network in the history of Australian TV ratings.

“Our competitors do their best to dismiss our achievements by saying our audience is old.

“In fact, there are more young people watching Seven than any other network by some margin, and this year we will not only win all the key demographics that are so important to our commercial partners, we will have our highest ever share of the key 16-39 and 25-54 demos.

“To our outlook in a little more detail, and if we take the market as a whole, the first quarter was flat with a softer September and October partly due to a pullback in spend from banking and insurance given the royal commission as well as government spend. Off the back of that successful cricket take-up we expect Seven’s metro FTA revenue share to grow in the second quarter and first half. The market performance in the second half is expected to be stronger driven by increased ad spend from a number of sectors including election money.

“Overall we expect the metro TV ad market to be broadly flat in the financial year, but for Seven to increase share.”

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