SWM profits, ad revenue drops

Kerry Stokes-chaired Seven West Media has reported falls in advertising and circulation revenue contributed to the newspaper division's 7 per cent profit slump.

The company's financial year 2023 results revealed its West Australian Newspapers arm recorded a 2.3 per cent drop in advertising revenue, while it continued its recent history of shedding newspaper circulation revenue, this time reporting a 1.1 per cent decline.

Profit before significant items, net finance costs, tax, depreciation and amortisation came in at $31.3 million, down from $33.7 million in FY22.

However, the publisher claimed a 17 per cent uptick in digital subscriptions revenue. It gave no detail about the raw numbers behind that growth, but did trumpet a 22 per cent increase in unique online users to 4.5 million.

It also appears to have finally revealed the size of the funding it receives from Meta (formerly Facebook) and Google, with a curious line item for revenue earned by WA Newspapers from "licencing of content and programming" first appearing in the FY22 report.

The deals with the online giants were signed in early 2021 and The West reported no licensing revenue in FY21. But just over $13 million in licensing revenue was reported in FY22 and almost $9.7 million in the most recent report, indicating that Google and Facebook were the likely sources of that revenue.

Importantly, the $3.3 million fall in licensing revenue accounted for almost all of the $3.7 million fall in WA Newspapers' EBIT. The Meta deal is due to expire in mid-2024, while the Google deal runs until mid-2026.

SWM blamed other factors for the WA Newspapers result.

“Despite excellent cost control, the impact of well flagged, significant newsprint increases during the year saw EBITDA decline by nine per cent,” Mr Warburton said. The report indicated that fall was actually one of 7 per cent.

The broader Seven West Media group, which includes the newspaper and Seven TV network, recorded earnings before interest, tax, depreciation and amortization of $280 million and earnings before interest and tax of $238 million, down 18 and 23 per cent respectively.

Its underlying net profit after tax was $146 million for FY23, a significant drop of 27 per cent from the previous year.

Mr Warburton said the group had delivered solid results in a challenging environment driven by the declining TV market.

He said the market had declined 7.9 per cent over FY22.

“The market decline accelerated during the second half, driven by the macroeconomic environment,” Mr Warburton said.

“Our position as a national TV network and the strength of our digital offering continues to resonate in the market and somewhat mitigated the market decline.”

Mr Warburton said the group’s costs had been well managed within the context of their investment in programming and the ongoing inflationary pressures across the business.

“Excluding depreciation and amortization, our costs increased by one per cent over the prior year to $1.2 million, which was in line with our most recent guidance and reflecting the benefit of the temporary cost savings,” he said.