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Edited Transcript of SWM.AX earnings conference call or presentation 17-Feb-20 11:00pm GMT

Half Year 2020 Seven West Media Ltd Earnings Call

OSBORNE PARK, PERTH Mar 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Seven West Media Ltd earnings conference call or presentation Monday, February 17, 2020 at 11:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James R. Warburton

Seven West Media Limited - MD, CEO & Director

* Jeffrey Peter Howard

Seven West Media Limited - CFO

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Conference Call Participants

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* Brian Han

Morningstar Inc., Research Division - Senior Equity Analyst

* Entcho Raykovski

Crédit Suisse AG, Research Division - Research Analyst

* Eric Pan

JP Morgan Chase & Co, Research Division - Analyst

* Eric Choi

UBS Investment Bank, Research Division - Director and Australian Telco and Media Lead Analyst

* Jay Shyam

Macquarie Research - Analyst

* Kane Hannan

Goldman Sachs Group Inc., Research Division - Research Analyst

* Lucy Huang

BofA Merrill Lynch, Research Division - Analyst

* Lilly Vitorovich;The Australian;Media Writer

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Seven West Media Half Year Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Mr. James Warburton. Thank you. Please go ahead.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [2]

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Well, thank you, and good morning, and welcome to the financial results presentation for Seven West Media for the first half of the 2020 financial year. I'm James Warburton, the Managing Director and CEO of Seven West Media. Joining me on the call today is Jeff Howard, our newly appointed Chief Financial Officer, who joined 3 weeks ago.

I'm delighted Jeff has joined us. I wanted to accelerate and upscale our transformation process of Seven West Media, and Jeff has extensive M&A and broader media experience as well as considerable credentials in optimizing capital structures.

This morning, I'll take you through our results for the 6-month period ending 28th December. Let's get started.

Slide 2 is our normal disclaimer. And on Slide 3, you can see the agenda for today's presentation. I'll take you through a summary of the 6-month period to December, and we'll then hand over to Jeff, who will walk through the financials in more detail. I'll then focus on the performance of each business unit and finish off with a trading update and an overview of the group's strategic priorities.

On Slide 4 is a summary of the business over the 6 months to December. There's no denying, advertising markets remain challenged in the second half of calendar year 2019. The overall advertising market declined 8.5% during the half with the metro TV market back 7% for the period. In the face of these challenging conditions, Seven continued to outperform, and the tenacity of our sales team saw us remain the #1 free-to-air television network by revenue share in the half, increasing our share to 38.8%, and with BVOD revenue included, that stood at 38.4% of market.

Despite revenue growth in our digital and studio businesses, the weaker advertising market meant group revenue declined 3.2% to $772 million during the half. Underlying EBIT declined 20.8% to $119.7 million. During the first half, we executed initiatives that delivered $45 million in cost savings, and we continue to target further savings going forward. Our net debt has reduced to $541 million, including the cash from the divestment of the Redwave radio, which came in 2 days after our reporting period. Despite the challenging operating environment, over the last 6 months, we have made major strides against our 3 strategic pillars of content-led growth, transforming the business and working down our debt. This turnaround will take time, but the moves we have made and our energy and focus on action will strongly reposition the business for the future.

We were transparent at the upfront when we said that we had lost our way in our entertainment schedule and tentpole strategy at 7:30 p.m. We've worked hard to improve this content, which was well received by our clients at the upfront. The new content hits the schedule in late April this year and will be amplified by an unprecedented launch platform into and out of the Tokyo Olympic games.

We transformed the organizational structure, removed duplication and simplified reporting lines from 17 divisions down to 8. This, coupled with our content shakeup, has delivered those $45 million of gross cost-outs in the Seven business. We have a new management team, 4 new appointments with 1 more to come, which will complete the lineup of the 9 that will drive the transformation forward. We successfully divested our noncore WA-based radio business, Redwave, to Southern Cross for a consideration of $28 million. And we also announced the proposed divestment of Pacific Magazines to Bauer for $40 million pre-adjustment. We continue to work collaboratively with the ACCC, while the statement of issues relating to the transaction is reviewed. A final decision is scheduled for the 2nd of April, and we remain confident it will be approved.

The proposed merger with Prime was blocked by 2 shareholders with different motives. This was an accretive Board recommendation transaction for both sets of shareholders, which we believe would have been a game changer for the market. With the stake in Prime acquired in December, SWM now has an option for the future, and we will remain patient. By their own admission, Prime faces challenges going alone in the market. Together would have been better for all shareholders.

One of our core strategic priorities is addressing our capital structure and balance sheet and working down our debt. We've been active in addressing this.

I'll now hand you over to Jeff, who will take you through the financials in more detail.

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Jeffrey Peter Howard, Seven West Media Limited - CFO [3]

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Thanks, James. Good morning, everyone.

Slide 5 shows the income statement for the half year ending 28th of December 2019. As James noted at the beginning, softer ad market conditions have impacted revenue and results in the half. Total group revenue and other income of $772 million decreased by $26 million or 3% during the period.

The benefits of the cost-out program implemented in the first half will mostly fall into the second half and into FY '21. Where we have been able to deliver savings, they have been absorbed by the full year effect of acquisitions, contracted cost growth and one-off events. As a result, group operating costs increased in the half by $6 million or just under 1% to $654 million. More on costs shortly. This combination of weak ad market and cost growth drove underlying EBIT to $119.7 million, a decline of 21%. This is clearly unsustainable.

Finance costs were lower on lower debt, and underlying tax expense was maintained at an effective rate of 29.5%. Overall, underlying NPAT before significant items was therefore $69.3 million, 22.5% lower than the same period last year. As a result of softer ad market conditions, we have adjusted the carrying value of our TV license and taken an onerous provision on some content assets. Combined, these have driven the significant items outcome of $165.6 million before tax.

During the period, the group adopted AASB 16 leases on a fully retrospective basis. As a result, the prior period has been restated. We provided a reconciliation in the Appendix to the presentation on the adoption of this standard.

On Slide 6, we have the statutory group financial results and a reconciliation from underlying EBIT. As a result of the impairment of significant items, Seven West Media reported a statutory after-tax loss of $67 million and basic earnings per share loss $0.044. Excluding significant items, earnings per share was $0.046. The Board has determined that it is again prudent to retain the suspension of the dividend, reflecting focus on capital management and increasing balance sheet strength and flexibility.

Moving to Slide 7. Significant items for the half were $166 million before tax. Key components of this were $62 million impairment of the television license; $96 million onerous provisions and impairment of assets, predominantly against content, including $58 million against future accretive rights payments; and transactions costs and other investment impairments make up the balance. Net of tax, these significant items totaled $136 million.

The chart on the right-hand side shows when the onerous provision will unwind. Key outflows in FY '21 relate to the Olympics, some of which has already been paid.

Slide 8 provides a waterfall of group costs during the period. Despite the cost-out actions in the first half, costs increased year-on-year. Consequently, I wanted to highlight the drivers of this growth. Community News Group was acquired in May last year, and we are cycling the impact of this acquisition into our cost base. Revenue also increased as a result, and synergies are being achieved by integrating Community News into the regional business in WAN. The second half impact will be slightly lower at $6 million of additional costs. The consolidation of 7Beyond in Seven Studios increased cost by $9 million in the first half. This was incorporated midway into the second half of last year and will impact the coming second half with an additional $12 million of costs from the full consolidation.

One-off live events included the X Games in 2019 and the Edinburgh Military Tattoo in FY '20. Both drive revenue, albeit less than cost. Our approach to one-off events is under review, and where possible, we will look to partner to reduce risk to Seven West Media. Sunday's Firefly concert was a great example of this with production shared with Foxtel.

Operational cost-out was then achieved in HF television, West Australian Newspapers and Pacific Magazines. Corporate costs were held steady in the half at approximately $7.5 million. An increase in third-party productions drove cost growth in Studios. Those are commissioned on a cost-plus basis. And revenue growth in digital saw cost growth in that business unit.

Overall, our ongoing transformation initiatives delivered net underlying cost savings of $15 million during the half. We continue to pursue cost initiatives and are targeting an additional $20 million in reductions that will be implemented during the second half, expected to deliver benefits in FY '21. Further savings will be pursued.

Slide 9 shows group cash flow for the half and our net debt position. Seven West Media recorded operating cash flow of $52 million for the half. Working capital, again, impacted operating cash conversion and relates to prepayments of the Olympics, Cricket rights, payments for purchased content and payments related to previously provided onerous contracts. Redundancy payments were $24 million and related to the transformation programs being implemented across the business. CapEx was $16 million during the period. While normal CapEx for the year is $30 million to $40 million, we are reviewing spend closely to ensure nonessential CapEx is deferred and revenue-generating CapEx is accelerated. Net debt was $570 million. When we include the $28 million Redwave proceeds received on the 31st of December, our net debt was $542 million. Group's net debt-to-EBITDA ratio was 2.4x, including that receipt.

Our debt facilities were extended during 2019 with the expiry of 2 tranches now up to December '21 and December '22, respectively. We will continue to focus on improving the strength of our balance sheet and working down our debt during the second half.

I'll now hand back to James to talk through the business unit performance.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [4]

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Thanks, Jeff.

Looking at Seven's performance on Slide 20 (sic) [Slide 10]. The metro free-to-air market declined 7% during the period, and despite this, our sales team continually worked tirelessly to deliver the #1 share in the linear television market. As already mentioned, we continue to rightsize the cost base, and this goes towards offsetting the previously announced investment in our content schedule. 2 of our 3 content pillars in news and sports not only continued to dominate but increased their leadership during 2019. Seven News remains #1 and increased its audience share by 1.3% in the metro markets during the year. Sunrise was the #1 breakfast show for the 14th year running, didn't miss a morning or didn't miss winning a morning, I should say, for the entire year.

Our sports offering continues to be second to none in the free-to-air market with the #1 winter and summer sports in the AFL and the cricket. During the 2019 season for the AFL, audience has increased by 3%, reaching a massive 15 million viewers across the country. Test Cricket, from an audience perspective, grew 12.5% year-on-year, and we are already in discussions with Cricket Australia to review the Big Bash season and product moving forward.

On Slide 11, we break out our digital earnings within Seven. Our digital revenue grew 58% during the period with EBIT of $11.9 million representing a 205% growth compared to the prior period. The BVOD market continues to grow rapidly. In the first half of fiscal 2020, the market grew ahead of expectation, posting 42% growth. This was an acceleration on market growth in the second half of fiscal 2019. We expect the BVOD market to continue its strong growth of over 30% in FY '20 as agency adoption improves.

This is a huge opportunity for Seven. We are achieving these numbers with weak tentpoles and low buzz from broadcast. As we launch our new content strategy, noisier and younger programs like Big Brother and others will have a dramatic ability to drive upside.

7News.com.au has been a stunning success, and we continue to focus on accelerating growth. We achieved 9.3 million UAs for the month of January and is now the #4 news site in Australia in just 10 months. The Latest on Facebook Watch has reached 100 million views this month with every episode now averaging 950,000 views.

The Olympics in 150 days' time will be huge for our 7plus strategy. We'll use this landmark event to maximize awareness, drive adoption and enrich our understanding of our audiences as the only Australian digital destination to watch the games.

The launch of VOZ in Australia will show the upside for TV. It is unfair that our product is measured only on overnight broadcast ratings. And from the early data we have seen, there is significant uplift in some key audiences around the 20% additional reach range, which will be a huge boost to demonstrate the true value of television for advertisers. Digital and broadcast are now one and the same at Seven, and digital is a rapidly growing part of our business, which will drive meaningful earnings growth in the future.

On Slide 12, we look at Seven Studios. 7Beyond has been consolidated into Studios for the first time, driving the increase in revenue. Excluding the consolidation, revenue declined 2.6% due to timing of finished program sales, which we expect to be weighted to the second half. However, this was consistent with our internal expectations, and the business remains on track to deliver its eighth consecutive year of EBIT growth. Seven Studios is capitalizing on the growing demand for quality content by doing licensing and co-production deals with global video streaming providers and has a pipeline of third-party productions.

Our returning production formats also continued to perform strongly during the period, underpinning the consistent earnings growth displayed over the last 7 years. Studios is an undervalued part of our business, and we are moving to structurally separate the business with clear delineation between Seven broadcasting and Seven Studios' resources. We continue to field a high degree of inbound interest to partner with international studios and production houses, and we have appointed an adviser to assist us with a strategic review.

Moving to Slide 13 on publishing. Our businesses are transforming but continue to face challenging conditions. The advertising market remains soft in WA. Revenue for The West declined by 1.4%, which includes a $7 million contribution from the Community News Group. Despite the challenging conditions in print, The West continues to outperform peers. Readership at The West increased 2% in the 12 months to September based on Roy Morgan survey data compared to double-digit declines among peers on average. Management continues to deliver meaningful cost savings, with $7 million of efficiencies delivered in the period, offset by the inclusion of the Community News Group. In June, thewest.com.au launched digital subscriptions, which are tracking ahead of target with plans to roll these out to regional markets. As well as providing new revenue streams, this will give us valuable audience data and insights, which we can then use to further monetize our leading local journalism.

Our magazine business, Pacific, also continues to face challenging market conditions and the uncertainty created by the proposed sale. We expect a decision from the ACCC on April 2.

Looking at our new content strategy on Slide 14. It gives you a snapshot of our schedule for 2020. At our Upfronts presentation to the market in late October, we could not have been more brutally transparent in our assessment of our content strategy and, in particular, our tentpole strategy at 7:30 p.m. We outlined our plan to change that and announced an investment in and focus on the 7:30 p.m. tentpole strategy, which is extremely well received by the media buyers. The strategy is to program from 7:30 p.m. Sunday to Thursday and to refresh aging formats to evaluate if we carry them forward. Wednesday and Thursday will be used to test returning formats or new shows at a lower cost, which can easily be scaled in future years if successful. Ideally, we're looking to take 5 to 6 tentpoles forward. Nonperforming shows or expenditure in nonessential areas has been refocused to pursue this strategy.

Our sales department have turned that support from media buyers into action, and we already have multiple sponsors on new franchises, Pooch Perfect, Holey Moley and Big Brother. It will take time. No network has fixed their content slate overnight. But in 2020, we have 9 tentpoles attacking that 7:30 p.m. area.

When you look at this schedule holistically, and you look at Seven's strength historically, I think it's plain to see why the buyers feel confident about it delivering audiences across the year. We are clearly disappointed with the decline in My Kitchen Rules this year, but we are focused on rolling out the new strategy. Pooch Perfect launches next week. In 3 weeks' time, we had 5 consecutive weeks of Thursday, Friday and Saturday primetime AFL. And of course, let's not forget, in over 150 days' time, we predict the biggest Olympics ever. 2 linear television channels, 43 streaming channels on 7plus, and with 10 partners and sponsors already confirmed, it'll be a huge ratings and revenue platform and valuable in launching our new shows.

Slide 15 demonstrates why this strategy is crucial for Seven. Put simply, we're dominant in every area other than the tentpole 7:30 p.m. slots Sunday to Wednesday. While 7:30 p.m. is currently a weakness for us, it's our biggest opportunity to drive revenue upside quickly. You can see in the Seven performance for calendar 2019 that against our target demographic of people 25 to 54, we win 64% of the time slots between 6 a.m. and midnight.

On Slide 16 is our trading update for financial year '20. Trading conditions were difficult for Seven in December and January with the free-to-air market declining 9.9% and 10.6%, respectively. Whilst we rebuild our content schedule, we also expect our share to be under pressure. AFL and the new programming is expected to drive ratings improvement into Q2. Subject to market conditions and ratings improvement, we expect full year earnings to be in the range of $165 million to $175 million of EBIT. This includes the impact in the adoption of AASB 16. We expect the BVOD market to continue its strong growth. Seven Studios remains on track for another solid year, while the essentially contra fund ventures portfolio continues to grow in value. Working down our debt is our priority focus.

Slide 17, our strategic priorities. Whilst we have made progress on our strategy, there is still much to do. We have a number of near-term priorities that we are focused on delivering within the next 6 months, some of which I've already discussed. The launch of our new content strategy in late April and ensuring we engage our audiences at scale is imperative. We have a new cost-out program that will target a further $20 million of savings in the second half, which will benefit FY '21. We're aiming to grow our share of the BVOD market, enhance our proposition, both the platform and content offering, while driving greater consumer adoption. The Olympics will play a crucial part in that strategy to increase penetration.

Working down debt is a priority focus, and we have a number of initiatives underway which could have a material impact on our current position. A strategic review is also underway on undervalued and surplus assets, some of which we've had inbound interest on.

Medium-term actions include the ongoing transformation of our business as we align the operating model to our content-led strategy. I said we'd be a hunter on M&A in the last results, and that remains the case. In my first 6 months, we've looked at 3 transactions with Prime, Pacific and Redwave. We'll continue to be creative and apply some entrepreneurial thinking. We want to get the business in order in the short term, but my mandate is to dramatically change the business, which means transformative M&A opportunities are very much on the agenda. There's much to be done, but I believe we have the team, the platform and the strategy to transform and grow this business to increase shareholder value.

So that concludes the presentation. Thank you for your time, and we're happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from Kane Hannan from Goldman Sachs.

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Kane Hannan, Goldman Sachs Group Inc., Research Division - Research Analyst [2]

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Just 2 for me, please. Firstly, just that full year EBIT guidance. Can you just give us a sense of what your expectation is for the TV market in the second half and I suppose, how you think about the risk to that number?

And then secondly, just in terms of the strategic reviews. Obviously, we know the announced transactions, the review on Studios you spoke about today. But is there anything else you can guide us to in terms of what we should be thinking about -- so is there any way that you can crystallize some of the value in your property assets?

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [3]

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Thanks for the question. I think from an EBIT point of view, we've looked at no dramatic improvement in the television market at this point. And the risk, obviously, is in the launch of that new content from late April going forward. Obviously, we've talked about the Studios business. The Ventures business is another opportunity, with most of those companies having done recent capital raise if the economics were right. And I think, obviously, all of our assets, either on-balance sheet or not, are under review in terms of how we can materially reduce debt.

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Operator [4]

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We have our next question from Lucy Huang of Bank of America.

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Lucy Huang, BofA Merrill Lynch, Research Division - Analyst [5]

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I've just got 3 questions. So firstly, you mentioned that you've been approached by some buyers for some of the undervalued assets in your portfolio. Are you able to give us some color as to what kind of assets you've been approached for?

And then secondly, in terms of revenue share, so we know that the new content lineup will launch in April. I was just wondering whether there's any other kind of sales initiatives in place to drive revenue conversion moving into the second half.

And then just thirdly, on the BVOD markets growing very strongly. But in the context of declining advertising budgets, I'm just wondering whether the premiums in the BVOD market have been sustained.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [6]

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Sure. Yes, look, again, I think from the assets point of view, Studios is a highly valued asset. And we've had significant approaches, particularly with the third-party commissioning. So we are either looking at a partner model or a potential sale of that asset. So I think from that perspective, that's probably all we'll discuss from an assets point of view. Certainly, from a sales department perspective, i.e., headline some of the sponsors that we have, we've got multiple sponsors on a lot of our new property and multiple sponsors on our existing sort of programming.

And our sales team, I think those numbers show very clearly the tenacity of the sales team in terms of driving revenue initiatives moving forward. We do hope that the market does improve. The economy, obviously, in a general sense, is very tough and the categories that drive television expenditure have all been challenged to a point, but we will continue to drive the revenue as hard as we possibly can. And as I said before, we got a lot of criticism about a program like My Kitchen Rules, as an example, from the ratings year-on-year, but we have a huge array of strength outside of that, that continues to drive revenue.

And I think from an overall BVOD point of view, for us, the opportunity is to drive, as I said, drive the platform, drive the product and actually drive the content on it. So that now sits under the programming arm and is one effective piece of content-driven property across both areas. So the premiums still exist quite well from that perspective. And the only other point I'd make is that the Studios opened up discussions around an SVOD partner as well, which is one of our sort of key initiatives in looking at our OTT VOD strategy as well.

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Operator [7]

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Our next question is from Eric Choi from UBS.

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Eric Choi, UBS Investment Bank, Research Division - Director and Australian Telco and Media Lead Analyst [8]

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First one, just on free cash flow. Just wondering, Jeff, if you can help us out. Will the working capital outflow sort of flatten in the second half of '20? And then do we think the sort of cash flow conversion gets worse in '21 versus FY '20 as well?

And then just a second question. I just wanted to go back to guidance again. I guess I'm just trying to get a feel for how much we've potentially de-risked guidance. So I guess is it safe to assume we're assuming no improvement on the minus 7% market growth that we saw in the first half into the second half? And then you've obviously got a comment on ratings improving in there. And I just noticed that we haven't done a 40% share for a half for a while, and we did close to 39% in the first half. So is that sort of the bounds of the market share expectations that you're expecting for the second half, somewhere between that 39% and 40%?

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Jeffrey Peter Howard, Seven West Media Limited - CFO [9]

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Eric, so just on cash, the cash flow. I mean the key driver is obviously going to be the earnings number, which we've guided to this morning. Yes, things like interest and CapEx and those sorts of things pretty much under control. The redundancy side will depend on the nature of the cost initiatives that we identify and execute in the second half going into FY '21. And then the other key piece is the unwinding of those onerous contracts and provisions, which we put that chart on Page 7 to give you a sense of the magnitude of how that unwinds. And clearly, a big piece of the FY '21 is the Olympics, as you sort of highlighted. And we've flagged there that a large piece of the Olympics has already been paid. So the cash flow is going to move around a bit, driven by those 2 factors. But from an FY '21 perspective, I think it's important to note that a big piece of that has already been paid.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [10]

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Yes. And I think on your second question, Eric, from an overall share perspective, you've seen the numbers for the half. So that first quarter for us is the quarter under pressure with the underperformance of My Kitchen Rules. The second quarter, we'd be looking to return to the more traditional sort of levels at that 38% to 39% revenue share, obviously, with the AFL, in particular, kicking in as well. And I suppose you could generally categorize the market at 7% in the mid -- early high single-digit range is sort of where our thinking has been.

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Operator [11]

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Your next one is from Entcho Raykovski from Crédit Suisse.

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Entcho Raykovski, Crédit Suisse AG, Research Division - Research Analyst [12]

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Three from me. The first one also related to the guidance. Just wanted to work out, if you can give us a number on the exact cost-out benefit that you've got factored into that full year guidance number of $165 million to $175 million, but particularly given that that's the one factor that you can arguably control.

Just secondly, and this is going into FY '21, but are you able to tell us what are the Olympics costs that have been written down? And how much still needs to go through the income statement? And I guess what I'm trying to get to there is what is the cost uplift associated with the Olympics that we should expect in FY '21 to go through the income statement.

And just finally, you mentioned that you've got about 10 sponsors for the Olympics already locked up. Is that it basically? Have you got all these -- the sponsors now locked in? And what's the sort of revenue uplift that that will likely give you for FY '21?

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [13]

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Yes. I'll start with your last question, and then I'll let Jeff answer the first 2. But so we look to 12 sponsors across the course of the Olympics. And as I said, 10 are signed, sealed and delivered, and the other 2 are not far away from that perspective. And I think it's a pretty material uplift in some senses, but obviously, contingent with the overall costs. So we expect that to be on track. I think we've written close to $90 million of revenue already into the Olympics, to put that in perspective. So it's quite a significant event for us.

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Jeffrey Peter Howard, Seven West Media Limited - CFO [14]

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So on the second question, we're working backwards, Entcho, if you will. Olympics is sort of a 60-, 70-ish number in the second half, a combination of further rights payments and production costs that will need to go through the P&L.

Back on the cost question, so question one. Yes, there are cost savings factored into the forecast for the full year, but there are cost growth drivers that will partially or fully offset some of that cost growth, things around the Studios slate that James referred to, contracted cost increases and other sort of content investment that we're doing. The savings side that we've assumed for the full year are around the sort of $35 million to $40 million.

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Operator [15]

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Your next question is from Jay Shyam from Macquarie.

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Jay Shyam, Macquarie Research - Analyst [16]

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Just a couple for me. Just eager to get a bit more of an idea of what you guys are doing in terms of costs with the new cost-out program, just given that you've already done quite a bit over the last couple of years. So where is that specifically targeting? And just in the current half, are you seeing any uplift from, obviously, the Olympics coming through in terms of what you're doing in terms of ad buyers and media buyers right now in this half?

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [17]

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Yes. I mean, I think, generally, from a cost point of view, as we've said, we're transforming the model. So step 1 was removing the duplication reporting and simplifying the organization. And I think it's sort of a continued program around that in terms of looking at the cost base and sort of better, faster, smarter type mantra. So we continue to review it. Jeff has been in the chair for 3 weeks so I'm certainly looking for an outside view on our cost base, sort of a back-end delivery and everything that sits, that's probably been sitting here traditionally, so we've got some big focuses on that.

And I think, secondly, your second question from an Olympics point of view is, ultimately, we're driving sort of revenue across all of our properties and the strength of that schedule moving forward. But the market is still short so we really need to be focusing on those tentpole strategies in particular and that coherent strategy across the entire day.

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Operator [18]

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We have our next question from Eric Pan from JPMorgan.

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Eric Pan, JP Morgan Chase & Co, Research Division - Analyst [19]

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I just have 1. Can you give us an idea of what your current revenue and ratings share are in that 25 to 40 -- 54 age group when including the 7:30 tentpole and how we should think about the magnitude of the revenue opportunities if your new shows are successful?

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [20]

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Sure. Yes. We'll have to come back to that, but I think we're around the 35%, 36% range when you include the tentpole -- when you take out the tentpole from that perspective.

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Operator [21]

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And we have our next question from Brian Han from Morningstar.

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Brian Han, Morningstar Inc., Research Division - Senior Equity Analyst [22]

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James, you quoted some ratings figures excluding tentpoles. Can you please explain how you define a tentpole? And do you address the returns from a tentpole the same as how you address returns from a normal program?

And also, secondly, on your newspaper assets, are you getting any interest -- incoming interest in them? And can you somehow use these newspaper assets to do something with those people who sank your Prime merger deal?

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [23]

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Okay. Well, interesting questions. I'll take the first one. I mean we're defining the tentpoles as effectively Sunday to Thursday 7:30 p.m., which is where we've continually had sort of, I suppose, you'd say a weakness through the back end of last year and obviously into this year. And the reason we're focusing on that is because we've got such inherent strength outside of those areas in our schedule. And so it talks to the opportunity for the business, if we were to get it right, with a hit, 1 or 2 hits in leverage for us to drive our share very quickly back into a higher area.

I'm just being reminded of the interest in newspapers. Look, there's a lot of discussions going on everywhere in the market, but our focus is on the performance of WAN. And certainly, our CEO over there, Maryna Fewster and our editor, our new editor, Anthony De Ceglie, are doing a fantastic job in terms of sweating those assets as hard as they possibly can and digitizing and transforming those assets.

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Jeffrey Peter Howard, Seven West Media Limited - CFO [24]

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And third question around Prime.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [25]

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Prime Media?

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Jeffrey Peter Howard, Seven West Media Limited - CFO [26]

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Anything we can do with people.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [27]

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Sorry, your third question was around Prime. And I think we've just said we're just being -- the primetime tentpoles?

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Operator [28]

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(Operator Instructions) We have our question from Lilly Vitorovich from The Australian.

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Lilly Vitorovich;The Australian;Media Writer, [29]

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James, I just wanted to ask you about the advertising outlook, whether you see any signs of green shoots out there and just for the rest of the year for your forecasting.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [30]

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Sure, Lilly. Just to pick up on the question, which I just was cut off there. So in terms of the other shareholders in Prime, obviously, we'll continue to have discussions. We have a great relationship with the new Chairman and obviously, the CEO under our affiliation agreement. But as I said in my sort of comments, we will be patient, and we'll continue to support that business where we can.

Yes, Lilly, to your question, I think from an advertising point of view, it's certainly been a tough start to the market -- to the year. And certainly, bushfires and coronavirus are probably unexpected events in terms of cutting back on brand spending in particular. And those core categories that sort of drive television revenue expenditure have all been pretty tough and are down across the board. We're not planning on improvement. I think there are some green shoots. But as I said, we're not -- we can't plan on an improvement. We have to do with what we've got on our plate at this particular point.

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Operator [31]

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We don't have any other questions as of the moment. Presenters, please continue.

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James R. Warburton, Seven West Media Limited - MD, CEO & Director [32]

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Well, thank you, everyone. Thank you very much for your time, and we look forward to seeing most of you on our road show.

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Operator [33]

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Ladies and gentlemen, that does conclude our call for today. Thank you for participating. You may all disconnect.