‘Not at an age where … sports bully us’: Seven boss confident new deals will generate cash

“It was an extremely easy decision not to have that half-a-billion loss-making content added to Seven’s bottom line. We are prepared to walk away if it doesn’t make sense; we’re not at an age where we’re going to have sports bully us into ‘you have to pay this or you have to pay that’.”

Seven, which owns television and publishing assets including The West Australian, posted $814.6 million in revenue in the six months to December, a decline of 0.5 per cent compared with the prior year. Earnings [before interest, tax, depreciation and amortisation] fell 4.8 per cent to $205 million and net profit fell 4.6 per cent to $114.9 million.

‘We’re not at an age where we’re going to have sports bully us into  “you have to pay this or you have to pay that”.’

James Warburton, Seven West Media chief

The company did not announce a dividend for the 11th time, arguing it needed to be prudent. Seven suspended its dividend in mid-2018 under former chief executive Tim Worner, arguing it needed to pay off debt and take part in potential merger and acquisition opportunities. Warburton said the board would review whether Seven could reinstate its dividend in six months. Shares closed down 4 per cent on Tuesday to 43 cents each.

Expenses remained largely flat for the six months ending December 31 despite inflation. Warburton said the newly identified efficiencies came mostly from operations and discretionary spending.

“For the absolute avoidance of doubt, it is not about head-count reduction,” he said. “There are no head-count plans, nor is it about content. We’re not looking at flushing content to save our way to success.”

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Warburton has previously spoken at length about merger and acquisition opportunities as a way to turn the fortunes of Seven around. In his time as CEO, Seven sold its magazine division which housed Marie Claire and New Idea, and bought its regional broadcast partner Prime Media Group. Seven last year invested $12 million in cash and $24 million in advertising into property entrepreneur Antony Catalano’s View Media Group through its investment division, Seven West Ventures.

But Warburton said he had no plans to participate in merger and acquisition activity this year with major broadcast deals now signed with the AFL, cricket and NBCUniversal. He said the focus was on growing market share.

“I can unequivocally say there is nothing on the table,” Warburton said. “There is nothing we put in front of the board and there’s nothing we’re considering. Our focus is on continuing digital growth.”

Seven is forecasting operating costs for the year between $1.22 billion and $1.23 billion, including the money it will pay for a long-term agreement with NBCUniversal.

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UBS analyst Tom Beadle said Seven’s result was largely in line with consensus estimates, but that “consensus estimates may need to be lowered” moving forward, due to uncertain market conditions.

Warburton said that even with mid to high single-digit decline in advertising spend, the market was still growing compared with pre-COVID-19 levels.

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