CONTENT. AUDIENCE. CONNECTION. Who We Are
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Content. Audience. Connection. For personal use only ANNUAL REPORT Contents Our Strategy Who We Are ..................................................................... 2 Our Strategic Framework and Performance Dashboard ........................................... 5 Looking Forward .............................................................. 6 Executive Letters Letter from the Chairman ................................................ 10 Letter from the Managing Director and Chief Executive Officer ............................................ 12 Review of Operations Group Performance – Key Outcomes and Summary of Financial Performance ........................ 14 Group ............................................................................. 16 Seven Network ............................................................... 20 Seven Studios ................................................................ 24 Digital Platforms ............................................................. 26 The West ........................................................................ 28 Pacific ............................................................................ 30 Other Businesses & New Ventures ................................. 32 Corporate Social Responsibility Risk, Environment & People ........................................... 33 Seven in the Community ................................................ 38 Governance Board of Directors .......................................................... 41 Corporate Governance Statement ..................................45 Directors’ Report Directors’ Report .............................................................58 Remuneration Report ..................................................... 62 Auditor’s Independence Declaration ............................... 89 Financial Statements Financial Statements ...................................................... 90 For personal use only Directors’ Declaration ................................................... 141 Independent Auditor’s Report ...................................... 142 Company Information ................................................... 148 Investor Information ...................................................... 149 Shareholder Information ............................................... 150 OUR STRATEGY OUR EXECUTIVE LETTERS EXECUTIVE KEY OUTCOMES GROUP PERFORMANCEGROUP REVIEW OPERATIONS OF RESPONSIBILITY CORPORATE SOCIAL GOVERNANCE DIRECTORS’ REPORT DIRECTORS’ For personal use only FINANCIAL STATEMENTS FINANCIAL 1 CONTENT. AUDIENCE. CONNECTION. Who we are We have secured our twelfth We tell stories. Powerful stories. consecutive year of leadership in television, both at a Network and Stories that inform, inspire and entertain. Channel level. We have secured Australia’s Stories that are created and curated by our number one summer and winter sports for years to come. multi-platform portfolio of trusted brands. We are producing more premium content than at Stories that are delivered when, where any time in our history. We are attracting record and how our audiences want. audiences to our digital platforms. Stories that engage many millions We are transforming our business, becoming more of Australians every day. efficient and more agile. OUR BRANDS For personal use only 2 SEVEN WEST MEDIA LIMITED ANNUAL REPORT 2018 ABN 91 053 480 845 OUR STRATEGY OUR OUR STRATEGY OUR EXECUTIVE LETTERS EXECUTIVE KEY OUTCOMES GROUP PERFORMANCEGROUP REVIEW OPERATIONS OF RESPONSIBILITY CORPORATE SOCIAL GOVERNANCE WE ARE NUMBER 1 #1 Network #1 Channel #1 Multichannel REPORT DIRECTORS’ for 12 consecutive years for 12 consecutive years 7mate For personal use only #1 Producer of #1 Australian #1 Primetime, News Premium Video Magazine and Breakfast Better Homes Content and Gardens Television Seven Studios STATEMENTS FINANCIAL For personal use only 4 SEVEN WEST MEDIA LIMITED ANNUAL REPORT 2018 ABN 91 053 480 845 Our Strategic Framework OUR STRATEGY OUR and Performance Dashboard STRATEGY OUR We are implementing three strategic pillars in our long-term growth strategy. Our performance LETTERS EXECUTIVE dashboard tracks the accomplishments and progress against our strategic pillars. FOCUS ON THE CORE STRATEGIC OBJECTIVES MILESTONES ACHIEVED KEY OUTCOMES GROUP PERFORMANCEGROUP Improve ratings & revenue performance. Strong broadcast ratings recovery after soft H1. Grow returns on content investment. – Record breaking 41.6% Jan-Jun commercial – Create, secure and curate the best local and FTA share international content – Schedule designed to carry audience – Maximise the return on our content momentum into FY19 investment through every window and Secured #1 winter and #1 summer sport, AFL overseas sale and Cricket, until 2022 and 2024. Increased investment in produced content and REVIEW OPERATIONS OF digital platforms. TRANSFORM THE OPERATING MODEL RESPONSIBILITY STRATEGIC OBJECTIVES MILESTONES ACHIEVED CORPORATE SOCIAL Deliver on operating cost saving targets. Cost out exceeded target leading to $21m Drive efficiencies in existing assets. net cost reduction including 7% headcount reduction. Partner with competitors in non-competitive areas to improve profitability. Ongoing cost savings initiatives implemented for FY19 realisation. Evolve to a leaner & more agile operating model while protecting content quality. Took control of digital content monetisation with GOVERNANCE Yahoo7 JV exit. Entered playout JV with Nine and commenced Sydney office consolidation. GROW NEW REVENUE STREAMS STRATEGIC OBJECTIVES MILESTONES ACHIEVED REPORT DIRECTORS’ Scaled 7plus to 2.6m monthly average unique Drive greater digital adoption and yield. For personal use only Introduce new content monetisation formats. audience in just six months. Invest in data, automation and targeted Seven’s digital advertising revenue up 100% YoY. advertising to maximise inventory yield. Seven Studios division EBIT grew 8% to $56.1m. Invest in adjacent verticals where we can Early stage investment portfolio grew 22% YoY. leverage the power of our assets. FINANCIAL STATEMENTS FINANCIAL 5 CONTENT. AUDIENCE. CONNECTION. OUR STRATEGY We have much to look forward to in the year ahead For personal use only 6 SEVEN WEST MEDIA LIMITED ANNUAL REPORT 2018 ABN 91 053 480 845 OUR STRATEGY OUR OUR STRATEGY OUR EXECUTIVE LETTERS EXECUTIVE KEY OUTCOMES GROUP PERFORMANCEGROUP REVIEW OPERATIONS OF RESPONSIBILITY CORPORATE SOCIAL Our refreshed programming schedule, the AFL Finals and the launch of Cricket will help us maintain our ratings leadership in what is now a growing advertising market. GOVERNANCE We will maintain our focus on We will create new partnerships revenue and ratings while delivering and expand existing partnerships on our cost-out targets, resulting in with our peers in non-competitive a leaner, more agile, core. business areas. We will continue to invest in our We will invest in verticals where we production capabilities, extending can leverage our audience and suite DIRECTORS’ REPORT DIRECTORS’ our position as Australia’s number of brands. one producer of premium long-form video, and maximising the return on And we will strengthen our balance For personal use only investment of this content through sheet to provide greater flexibility every window. and deliver more value to our shareholders. We will invest and grow our digital capabilities, driving greater adoption of 7plus and leveraging our data, FINANCIAL STATEMENTS FINANCIAL insights and technology to drive yield across all screens. 7 CONTENT. AUDIENCE. CONNECTION. RUNNING HEAD Seven is the new home of Cricket This year we signed a historic six year agreement with Cricket Australia that sees Australia’s only truly national game back on Seven. In total, we have secured over 400 The globally renowned Alison We will create new viewing habits hours of premium sport across Mitchell will call ball-by-ball Test by producing appointment TV the summer – more than double action, together with Tim Lane viewing. We have worked with that of the Australian Open, at a and former South Australia batter Cricket Australia to make Thursday, significantly lower cost per hour. James Brayshaw. Ex-Australia Friday and Sunday the key days and Test players Lisa Sthalekar, Jason nights, with Tests and the Big Bash Our coverage will feature the Gillespie, Greg Blewett, Simon starting at 7pm. The Summer of 7, strongest commentary team Katich and Brad Hodge will on 7, at 7. Australia has ever seen. provide expert commentary. This will be the first time that a single For personal use only Mel McLaughlin and Abbey Gelmi And to cap it off, iconic sports FTA network will carry both the BBL will host Seven’s broadcasts, with broadcaster Bruce McAvaney will and Tests, meaning we can cross- commentary coming from legends host a lunch-break show during the promote and monetise the two most Ricky Ponting, Glenn McGrath, Melbourne and Sydney Tests. popular forms of cricket in a way Michael Slater and Damien Fleming. never before possible. 8 SEVEN WEST MEDIA LIMITED ANNUAL REPORT 2018 ABN 91 053 480 845 OUR STRATEGY OUR OUR STRATEGY OUR EXECUTIVE LETTERS EXECUTIVE KEY OUTCOMES GROUP PERFORMANCEGROUP REVIEW OPERATIONS OF RESPONSIBILITY CORPORATE SOCIAL CRICKET The deal includes: GOVERNANCE 43 of the 59 Big Bash League matches, We will use the unrivalled Together with the AFL, Seven is now including all marquee marketing power of our News and the home of Australia’s number one matches and finals Entertainment program schedule summer and winter sports.