Why Seven and Seek didn’t get positive feedback on outstanding wins

The Reserve Bank of Australia notes in minutes of its August meeting released on Tuesday that while economic growth for Australia for calendar 2022 has been revised downwards and inflation has been adjusted upwards, the economy had remained strong in the first half of the year and the labor market was tighter.

Based on the minutes, Capital Economics indicated that September would bring another half a percentage point hike in interest rates.

The RBA is walking a tightrope between trying to do everything in its power to cool domestic demand and inflation while ensuring it doesn’t go too far and push Australia into zero economic growth or into recession.

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Seven CEO James Warburton downplayed recent weakness in TV advertising revenue, which had fallen from election- and Olympic-related highs, and reportedly said the group expects a strong ad booking cycle in the coming months.

However, Seven’s forecast report for the first quarter of the current fiscal year said that the total television advertising market fell by an estimated 2 percent but declined by 7 percent including the Olympics. However, for the second quarter of fiscal 2023, Seven’s outlook is positive year-over-year.

The earnings recovery rate that Seven has seen over the past two years is impressive, but not sustainable.

In 2020, Seven was in desperate need of a financial revitalization. It has taken a fairytale turn from the days when there were question marks over whether Stokes would ask for a capital injection.

The company now wants to fund a 10 percent share buyback.

The company’s stock price reflects this earnings and balance sheet renaissance — over the past two years, shares have gone from 12 cents to 50 cents.

Seven said TV earnings (before interest, taxes, depreciation and amortization) in 2022 were the best in 11 years.

While the company is now in better financial position, its share price will continue to reflect macroeconomic conditions that are not favorable to media companies in the near term.

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https://www.smh.com.au/business/companies/weak-applause-why-seven-and-seek-didn-t-get-a-positive-reception-from-stellar-profits-20220816-p5bab7.html?ref=rss&utm_medium=rss&utm_source=rss_business Why Seven and Seek didn’t get positive feedback on outstanding wins

Brian Lowry

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