Seven West Media will pursue cost cuts to maintain profitability in the face of declining advertising markets affecting its television, newspaper and magazine operations.
The media group reported a 97.1 per cent gain in net profit to $226.9 million for the year to June 30, 2012, the increase courtesy of the larger company created when West Australian Newspapers took over Seven in April, 2011.
Revenue for 2011/12 was $1.96 billion – in line with the previous year according to pro-forma estimates provided by the company.
Shareholders saw their dividend plunge, from 26 cents in 2011 to six cents for 2012.
Seven West chief executive Don Voelte, conducting his debut results presentation since his appointment in June, said all businesses had remained strong in a soft advertising market.
Management had guided the company through “not just choppy waters but stormy waters”, the former Woodside Petroleum boss said, but “the storm continues”.
“Revenue markets remain challenging across all divisions,” Mr Voelte said.
Costs are under review across Seven West’s four divisions of television, newspapers, magazines and digital.
The core Seven Network television business achieved a two per cent increase in revenue, on a pro-forma basis, to $1.1 billion, while costs rose 9.3 per cent.
Head of television Tim Worner said some long-running programs may be cancelled and indicated news and current affairs would be examined for savings.
“I would suggest that our newsrooms will be operating differently in 2013,” he said.
Newspaper advertising revenue slipped 6.5 per cent, on a pro-forma basis, to $264.8 million, with WA media assets head Chris Wharton blaming poor consumer confidence for a slip in display ads, particularly from retailers.
At Pacific Magazines, ad revenue was down 11 per cent on a pro-forma basis to $97.7 million, but the division reported a 5.4 per cent reduction in costs.
The Yahoo!7 digital business enjoyed a 26 per cent pro-forma rise in total revenue, albeit to a small $121.9 million.
Seven West chief sales officer Kurt Burnette said the total advertising market had fallen 0.2 per cent in the past year.
In the future, television and online would see continued revenue growth while magazines and newspapers will continue to decline, albeit at a diminishing rate, he said.
Patersons senior industrial analyst Graeme Carson said Seven West was managing costs in an environment where revenue was not growing.
Mr Carson, who has a buy-rating on the stock, said Seven West was well-placed to capitalise on any upturn in the advertising market.
While the growth in the digital business was important strategically, material improvement had to come from television, he said.
“It’s really a story about leveraging off your potential earnings base in TV,” he said.
Seven West also announced the appointment of Michelle Deaker, David Evans and Ryan Stokes as directors, and revealed Mr Voelte’s pay packet will be $2.6 million.
