You can see why shares in Seven West Media (ASX:SWM) have hit new all-time lows of 14 cents this week, as the company revealed a 69% slump in earnings for the year to June.
That slide also explains why the company, along with Nine, Ten, and Foxtel, is strongly resisting moves to completely ban gambling ads on TV but to allow some sort of limited screening.
Over $240 million a year is the estimated gambling spend and sponsorships on Australian TV and radio, plus tens of millions more spent on sponsoring sporting teams and stadia.
With that sort of spending, the struggling media is trapped by necessity, even though surveys show that many viewers object to gambling ads and sponsorships.
The Kerry Stokes-controlled company reported $45 million in net profit for the year to June 30, weighed down by falling advertising sales and $44 million in one-off charges, including restructuring costs and write-downs for the value of TV programs (now an annual occurrence in the company’s accounts).
Revenue dropped 5% to $1.42 billion as the Seven Network saw its ad bookings decline, along with the rest of the TV industry. Even without the one-off charges, profit fell 46% to $78 million. And operating earnings before significant charges fell a third to $187 million.
And of course, there are again no dividends. None for nine years.
Investors knew the bad news was coming and marked the shares down 14% in the past month, which has seen the market value drop to just under $240 million – well under net debt of just over $300 million. In other words, the company had a negative value, according to investors.
“FY24 is a tough result for [Seven West Media] in a challenging market,” CEO Jeff Howard said as he delivered his first results since replacing James Warburton in April. The earnings decline led him to step up cost-saving measures for the current financial year, with up to 150 jobs cut.
Those costs are part of an attempt to chop more than $130 million in costs by the end of this financial year to try and arrest the earnings slide.
Revenue at The West, the group’s Perth-based newspaper, edged up 1% to $172 million, but operating earnings fell 13% to $27 million.