TV’s bloodiest day

BY Tim Burrowes

June 25, 2024 10:59

Today: Seven’s leadership team is wiped out in one of the most dramatic days the media market has seen.

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An EOFY massacre at Seven

Kurt Burnette is out just months after revealing new trading system Phoenix at Seven’s Upfronts | Pic: Tim Burrowes

In the Australian TV industry’s 68 years, there has never been a day as consequential.

Yesterday Seven West Media axed its sales chief Kurt Burnette, marketing chief Melissa Hopkins and sport chief Lewis Martin. Factor in the departure of CEO James Warburton, legal chief Bruce McWilliam and news chief Craig McPherson in April, and the leadership of Australia’s most watched TV network has changed almost entirely in just two months. Among Australia’s big media companies, that’s unprecedented.

The one top tier survivor is new CEO Jeff Howard, promoted from chief financial officer when Warburton departed.

Of all Australia’s big (or formerly big) media companies, Seven is the most exposed.

Audiences fell off a cliff when the Covid lockdowns proved to be a last hurrah for free to air TV. A cyclical fall in ad spend across the market combined with structural change as marketers opted for connected TV, or away from the sector altogether. Month after month, the TV market has been in double digit decline. And unlike Nine’s ownership of Stan, Seven does not have a subscription streaming TV alternative.

On the publishing side, with The West Australian as the centre of gravity, Seven West Media is facing similar structural decline. With the exception of launching The Nightly, there has been little sign of the company investing in evolving its publishing business ahead of the entirely predictable decision from Facebook not to provide more funding.

Another factor putting Seven in a worst place than its biggest rival is that Nine can at least look to its majority ownership of real estate platform Domain.

If things continue as they are, there will be a question of whether Seven can afford to see out its long term AFL contract.

It explains why shares in Seven West Media have been in freefall – this financial year alone, investors have lost more than half their money. The company’s market capitalisation is just $270m.

Better to cut now, and deeply. Seven’s cuts – reportedly amounting to 150 jobs – are not taking place in isolation. News Corp has been rolling out its own, significant restructure.

Neither company has communicated their changes particularly well to the market. On the day it made these fundamental changes, Seven contented itself with a press release about how Sunrise outrated Today by 19%. If you want a metaphor for Seven still fighting the wrong battles, that’s it. As I write, there’s been no ASX announcement.

Speaking of News Corp, what is gradually becoming clear is that unlike its last radical restructure in 2012, cuts on the journalism side have been lighter than on the News Corp sales teams. That’s rational in a changed market. In the media business model, the pendulum has swung away from advertising revenue and towards subscription revenue. If you want subscribers, you still need the staff to give them a quality product.

Meanwhile Seven’s timing – four days before the end of the financial year – is just as rational. The redundancy costs will now be booked in FY24. That will mean a horrible number to give to the market in August results season, but a comparatively better number 12 months later.

The management at other media companies under share price pressure – which is all of those listed on the ASX – will be divided into two groups today. Those who are planning to make their cuts later this week, and those wondering whether they should have.

Meanwhile, the advertising market has a lot to chew over. Burnette was well liked and respected, with nearly 35 years at the network. Thirty five years! Imagine what sort of day he had yesterday.

Alongside Nine’s chief sales officer Michael Stephenson, Burnette was media’s best paid sales executive – $1.6m last year; $2.1m the year before.

Meanwhile, Melissa Hopkins was the first attempt by a TV network to hire a classic chief marketing officer, and she had a high profile within the ad community too.

The natural experiment of Hopkins vs Nine’s sales exec-turned-CMO Liana Dubois now ends early, before the Seven rebrand Hopkins had been masterminding even rolls out. I doubt we’ll see it now.

Hopkins was also the brains behind Seven’s shift to running its Upfronts as part of SXSW Sydney. Although troubled networks (see Network’s Ten’s 2013 Upfronts) tend to put on lavish events as a show of confidence, this year’s Seven event will surely be muted.

Hopkins exit as chief marketing and audience officer also means one fewer woman at the top of television. With Amanda Laing’s imminent exit from Foxtel Group, Paramount boss Beverley McGarvey will soon be the only woman at the top table.

There will also be ripples from Lewis Martin’s exit. The relationships and understanding of the sports rights dynamic he developed as head of network sport will see him in demand from the streamers and elsewhere as they navigate the reworked anti-siphoning landscape. Martin was also Seven’s Melbourne boss. With an advertising background, he was almost as significant a player in the Melbourne ad market as Burnette was in Sydney.

It’s been a big, big week, and it’s only Wednesday.