Seven West Media chief executive James Warburton says he will prioritise company costs over “ego” as the network prepares to fight rivals in broadcast negotiations and delivering a ratings win over the next financial year.
Shares in the Kerry Stokes-controlled media company closed at 50 cents each, down 3.9 per cent, despite Seven posting its best earnings performance since the era of veteran TV boss David Leckie. Analysts said the weak performance of the stock was driven by uncertain market conditions rather than the announcement of an on-market buyback scheme.
However, Warburton and his chief financial officer, Jeff Howard, said the company would continue to watch costs amid inflationary pressures. Warburton said market downside was “way overblown”.
“When you look at the business… you’ve got to be very careful about the decisions you make,” he said, rather than just spending too much on a sporting contract or a content supplier arrangement.
Seven is doing battle with rivals Paramount and Nine Entertainment Co and pay TV and streaming company Foxtel to retain the AFL broadcast rights beyond 2024. This week, the AFL is reviewing the non-binding offers from incumbents Foxtel and Seven, Paramount (the owner of Network Ten) and Nine, the owner of this masthead and streaming service Stan. A decision is expected by the end of the AFL season when outgoing CEO Gillon McLachlan departs.
Warburton said he would not do a deal without the digital rights, and any decision to put more games behind a paywall would reduce the amount he was willing to pay. “From a Seven perspective, anything going behind a paywall lessens the value,” he said.
The talks coincide with a raft of other expensive content deals – namely the cricket, tennis and Olympics. Advanced talks between media companies and NBC Universal, the US film studio behind popular shows such as The Office, Brave New World and Gangs of London, are also under way. The Commonwealth Games is in an exclusive negotiating period with its broadcast partner, Seven, for the Victoria 2026 Games. All of these rights are expensive.
“We’ve said consistently, it’s economics over ego, in all of those decisions. We need to have a business,” he said.
While successful bids for any deal won’t be accounted for in next financial year’s results, UBS analyst Tom Beadle said fiscal year 2023 forecasted costs of $1.2 billion to $1.22 billion were a little higher than expected.