UPDATE 3.15pm: Seven West Media is cautiously optimistic about a recovery in television advertising, with signs of increasing demand from mainstream advertisers helping make the September quarter one of the best in some time for the group's Seven Network.
"It's a good quarter, and the best quarter we have seen for some time," chief sales and digital officer Kurt Burnette told analysts today.
Mr Burnette said while election-related spending was driving the "good, solid numbers", Seven was also seeing signs of a pick-up in interest from other major advertisers in the likes of the retail and automotive industries.
The group was commenting in the wake of announcing a $225 million annual operating profit, down marginally on the previous year and above its guidance.
On a statutory basis, however, the owner of the Seven Network and publisher of The West Australian newspaper reported a net loss of $70 million, which took in $295 million in significant items including impairments, restructuring and redundancy costs and other items.
The company will maintain its final dividend at six cents a share fully franked, bringing its full year dividend to 12 cents.
Chief executive Tim Worner said the company’s operating margins were healthy and well-defined cost management had placed Seven West in a strong position to meet the challenges of the coming twelve months.
“Our television business continues to lead in both audience share and advertising revenue,” he said.
“Our publishing businesses are out-performing their peers in what is a challenging market, delivering great content, managing their costs and building the framework for their moves into new forms of content delivery and revenue streams.
“The company’s objective over the coming twelve months is to further strengthen our financial performance in a challenging advertising market. We will continue to invest in content and drive home the leadership of our media businesses.
“We are deeply focused on cost management and developing greater synergies across our businesses.”
Seven West noted its businesses had been operating in subdued advertising market conditions for the past year with the metropolitan television advertising market declining 2.2 per cent, the newspaper advertising market declining 19.6 per cent and the magazine advertising market declining 19.8 per cent for the year.
“There have been some improvements in market revenue trends in the second half particularly in television where our market share improved consistently over the year to 40.5 per cent (January to June 2013),” the company noted.
Seven West said its phased cost reduction program had already delivered $71 million in improved revenue and reduced expenses last financial year.
“Additional benefits from the program are anticipated to be delivered in the 2014 financial year and work is already underway on the next phase of the program to enhance performance in 2014 and beyond,” the company said.
The Seven Network delivered EBITDA of $320 million (25 per cent of revenue) down 3.6 per cent. The result was achieved on revenue of $1.3 billion, up 0.4 per cent on previous year.
The West Australian and regional newspapers delivered EBITDA of $107.5 million (35 per cent of revenue). This performance was delivered on revenues of $303.1 million, down 13 per cent on the previous year, reflecting the soft advertising market.
Pacific Magazines delivered a positive financial performance in a challenging market, with EBITDA of $36 million and revenue of $256 million. Costs were down 8.3 per cent, reflecting savings in almost all operating areas of the business.Seven West shares closed up 13 cents, or 5.6 per cent, at $2.45.