The Seven West Media full-year results were delivered this week by the chief executive and managing director James Warburton two years to the day since he arrived back at the broadcaster. On that day in 2019 he had only a couple of days to prepare to deliver what was not a great result.
This time he was better prepared and had a better FY21 result to share.
In 2019 Warburton revealed a three-year plan, and after two years the progress has been impressive. When he arrived the business was often referred to as “debt-ridden and challenged”.
The new boss didn’t hold back either. “Back then I talked openly about how I thought we were tired, stagnant and stale,” he explained to Mediaweek on Monday.
“We certainly had some work to do and now we are a very different organisation. Back then we didn’t have data, we didn’t have digital. The digital earnings have gone from 7% when I started to 25% this year. We forecast that number will more than double next year with $120m of EBITDA.
“We nearly have the lowest amount of debt ever, certainly since 2004. We went from having a very stressed balance sheet to having that fixed.
“To have our strategy firing so well and to have been able to do it in two years is a quick turn-around.”
The Voice coaches 2021
Ratings domination
“No matter how you cut the ratings this year – survey year, calendar year, survey with Easter out, survey with Olympics out – we are winning. We are the only network to grow our commercial share in all the demos and we are going to win the year.
“That is a real credit to our programming department. We took The Voice from Nine and it is the biggest entertainment program this year. We have reinvested in it, cut it down and put new energy into it.
“The first episode of The Voice had 291,000 people watching on 7plus which is extraordinary for a show doing 2m+.”
The 2021 ratings year hasn’t been all about hits though. Warburton noting not everything has worked. “We didn’t have a great start to the year. Holey Moley started well and faded quite quickly. And then Ultimate Tag was a complete and utter failure.
“But from April we have been dominant in the demos. We have won 19 out of 33 weeks so far. Next year we have The Voice Generations and SAS Australia, the Ashes will go late into the Australian Open and then the Winter Olympics are in February, again with a two hour time difference for Beijing.
“We expect to be quite disruptive where we have struggled previously in the first quarter.”
The results presentation highlighted an extra $30-$40m additional investment in content into the first half of next year as well.
Seven Studios staying put
Warburton: “We needed to reset the cost base and take out $200m. At the height of the pandemic we were able to generate $152m of cash and repay $250m of debt. It shows how important it can be to get the costs out. We have the lowest headcount at Seven since 2003. We are doing more with less. We have no plans to reduce numbers further.
“The Seven Studios business is effectively Home and Away and Better Homes and Gardens. We were looking to sell that and we have very, very little, if any, interest now. They are fundamentally critical programs for us and great performers.”
When asked if Seven will now keep that production business, Warburton said “definitely.” But he added, “Never say never. If someone turned up with a big cheque…”
Olympics now and next time, Ashes threat
Regarding Tokyo 2020, Warburton said Seven didn’t think it wouldn’t go ahead. “It was mainly press coverage from a competitor. There was no doubt the IOC was running it. There was a pretty negative campaign around it. We wrote record revenue for an Olympic Games from the sales team and digital team who did a fantastic job. We did $20m dollars better than we thought we would. We had a $70m onerous contract provision, and we effectively lost $50m on the Games.”
Warburton also noted yesterday the success of a Games can’t be judged in isolation. Look at the impact it is having on the schedule in the past fortnight.
“We repeat the point we have made consistently. These were contracts we inherited and we have no desire to go and blow our brains out on future rights. This was an Olympics for the first time since 2008 that was in a really attractive time zone and we had the east coast in lockdown.
“For the second week of coverage to be as strong as the first week with few Australian Gold medals has never been done before. It was an amazing result [head of sport] Lewis Martin and his sport team delivered. All the reports that we will go and blow our brains out again [with a big rights bid] are wrong. It’s not going to happen.”
Regarding threats to the Ashes with England players reportedly unhappy about touring with families in quarantine, Warburton noted the T20 World Cup will see players in quarantine bubbles ending in mid-November in Oman and UAE. “We are very confident Cricket Australia will deliver the Test series as they did with India last year. Australia is getting quite good at Covid protocols.”
James Warburton with Seven CFO Jeff Howard deliver the results
SVOD opportunities
Seven is hopeful of finding an SVOD partner. “The thing you don’t want to do is be a local player and counting on someone renewing your contract,” said Warburton. “If you are a local player waiting on a renewal you are dead. As we showed with the Summer Games it is about having a partner.
“There are a number of people we are talking to. The market will consolidate as it can’t withstand all the streaming services. We are very well positioned. We have 9.4m registered users with 7plus. What a fantastic launch platform together with our broadcast network. We are working through a number of options.”
OzTAM ratings changes
The TV boss became animated when asked about overhauling the ratings system. Warburton said it was harder than most people might think to get a national total TV figure released every day. “I have been campaigning hard for this. We need to be more progressive. For 21 years we have been doing the same thing the same way and releasing the smallest possible [ratings] number. We are making progress. It was due to come out next week, two years too late. It is too slow from OzTAM. We as an industry are responsible for that. We own OzTAM and we need to be driving it harder to be more progressive.”
Warburton noted sales chief Kurt Burnette is Seven’s OzTAM board member and he is fired up. “I might dial into the next board meeting myself too,” added Warburton.
See also: Seven West Media’s Gold Medal performance: Profit lifts to $229m, up 141%