It’s a bad day on the ASX for Seven West Media, despite reporting relatively positive FY21 results.
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Seven West share price falls 5.34% on suspended dividend
Revenue of $1.27 million – up 4%
Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $254 million – up 105%
Expenses reduced by 7% to $1.02 million
Net debt reduced by 39.6% to $240 million
Dividend remains temporarily suspended
What happened in FY21 for Seven West Media?
It’s been an exciting year for Seven West Media and its share price.
The company was the first Australian media entity to strike a deal with Facebook and Google. The Seven West share price gained 3.7% on the back of the agreement.
Seven West was also the only Australian network to see its commercial market share grow in FY21.
7plus saw a 104% year-on-year growth of registered users. There are now 9.2 million people registered with the platform. Additionally, advertising revenues from online catch-up and live-TV streaming were up 54.6% in FY21, bringing in $251.7 million. Seven Digital’s revenue also increased 66.8% to $92.1 million.
The company’s print and digital outlets may also be weighing on the Seven West share price.
The company’s West Australian Newspapers – which houses titles including The West Australian, The Sunday Times, 19 regional publications, 13 suburban newspapers, and PerthNow.com.au – saw a 2.9% dip in revenue. It brought in $162.2 million. However, it reported EBITDA of $28.5 million, 39.9% more than its EBITDA in FY20. The West‘s print and digital audiences grew by 19% and 20% respectively over FY21. PerthNow.com.au‘s audience increased by 34.4%.
Seven West stated West Australian Newpapers’ advertising conditions are still mixed, as retail has strengthened while travel, auto and real estate remain weak.
What did management say?
Seven West Media chair Kerry Stokes commented on the company’s performance over the financial year:
Despite the naysayers, Seven’s ongoing investment in linear and digital content will underpin our long-term prosperity. Seven West Media is taking the opportunity to better monetise our content on all broadcast and digital platforms to ensure we compete with the foreign-owned groups and will implore the Federal Government to remain vigilant in regard to fair competition…
[O]ur combination of investment in content across all of Seven West Media’s platforms, coupled with prudent cost-cutting and operational efficiencies, will be the priorities of your Board and management over the next year.
What’s next for Seven West Media?
Seven West will focus on its digital strategy in FY22. Seven Digital is expected to bring in EBITDA of $120 million with an expected compound annual growth rate of more than 110%.
The company also expects FY22 to be impacted by one-off costs. Seven West’s managing director and CEO, James Warburton, said the company will report costs from the Tokyo Olympic Games, the Beijing Olympic Winter Games, and the Ashes Test Series in FY22.
Seven West share price snapshot
The Seven West share price is currently 48.8 cents. It has gained 47% year to date. It has also increased by 343% over the last 12 months.
For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 24% since this time last year.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.