In a bid to revitalize its financial performance, Seven West Media is looking forward to the upcoming federal election as a potential lifeline. The company, backed by Kerry Stokes, has experienced a significant decline in profits due to reduced advertising revenue and rising business costs. Over the six months ending December 31st, profits plummeted by two-thirds to $18 million compared to the same period last year. CEO Jeff Howard expressed cautious optimism about the election's impact on advertising sales, noting that mining magnate Clive Palmer has already begun purchasing ad space.
Financial Struggles and Strategic Adjustments
In the face of challenging economic conditions, Seven West Media has encountered substantial financial hurdles. During the first half of the fiscal year, the company's total revenue fell by 6% to $727 million. Television revenue alone dropped by $45 million, while print media also saw a decline. The company attributes these losses to advertisers cutting back on spending amid inflationary pressures and shifting consumer habits towards digital platforms. Despite these challenges, Howard remains confident that election-related advertising will provide some relief. He highlighted early interest from Clive Palmer, who has already made initial investments in ad space ahead of the expected April or May election. Although modest at this stage, Howard anticipates this trend will grow as the election approaches.
The company has been proactive in adapting to market changes. Howard pointed out that digital content consumption has surged, with streaming up by 43% and online readership increasing by 10.6%. The new digital publication, The Nightly, has garnered 8.3 million page views. Additionally, Seven West continues to advocate for government policies that could support media companies, such as the news bargaining incentive aimed at encouraging digital platforms to compensate publishers for news content. However, concerns remain about the potential impact of gambling advertising restrictions on media revenues, a topic that Howard emphasized in discussions with the government.
From an investor's perspective, the outlook appears cautiously optimistic. Shares in Seven West rose 3% following the release of the half-year results, although they remain down nearly 40% over the past year. Competitor Nine Entertainment also saw a 10% jump in share prices, suggesting a possible turnaround in the advertising market.
As the media landscape continues to evolve, Seven West's focus on diversifying its revenue streams and optimizing digital offerings may prove crucial in navigating these uncertain times. The upcoming election could serve as a pivotal moment for the company, offering both opportunities and challenges in the competitive world of media and advertising.