The Reserve Bank of Australia, in the minutes of its August meeting released on Tuesday, notes that while economic growth for Australia for calendar 2022 has been revised down and inflation had been upwardly adjusted, the economy had remained strong in the first half of the year and the labour market was tighter.
Based on the minutes, Capital Economics suggested September would bring another half a percentage point rise in the interest rate.
The RBA is walking a tightrope between doing all it can to cool domestic demand and inflation while ensuring it doesn’t go too far and push Australia to zero economic growth or into a recession.
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Seven boss James Warburton downplayed the recent softness in television advertising revenue, which had come off the highs associated with the federal election and Olympics, reportedly saying the group was looking at a strong advertising booking cycle in the coming months.
That said, Seven’s outlook statement said for the first quarter of the current financial year the total television advertising market was down an estimated 2 per cent, but down 7 per cent including the Olympics. However, for the second quarter of the 2023 financial year, Seven’s outlook is positive year-on-year.
The rate of earnings recovery Seven has experienced over the past two years, while impressive, is unsustainable.
In 2020, Seven was in dire need of financial revival. It has engineered a fairytale turnaround since those days when there were question marks over whether it would require Stokes to provide an equity injection.
The company is now looking to finance a 10 per cent share buyback.
The company’s share price has mirrored that earnings and balance sheet renaissance – over the past two years its shares have risen from 12 cents to 50 cents.
Seven said the television earnings (before interest, tax, depreciation and amortisation) in 2022 were the best it had reported in 11 years.
While the company is now on a more financial footing, its share price will continue to reflect the macroeconomic conditions that do not favour media companies in the near term.
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