Seven West (ASX:SWM) share price wobbles on market update

The Seven West Media (ASX: SWM) share price is seesawing today after the company released a number of updates to the ASX. Here’s the lowdown.

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Seven West Media Ltd (ASX: SWM) shares are on the slide in afternoon trade after having been up by more than 9% earlier in the day. At the time of writing, the Seven West share price is trading 1.05% lower at 47 cents.

The movement comes after the company announced the signing of two agreements, along with providing an FY21 trading and debt update.

Let’s take a look at what the media company has been up to.

Sign-off on Google and Facebook deals

Judging by today’s Seven West share price, investors are ambivalent over the company’s latest statement to the ASX.

According to its release, Seven West Media has finalised its partnership with Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)’s Google and entered into a long-form agreement with Facebook Inc. (NASDAQ: FB).

This follows the signing of letters of intent (LOI) with both of the tech giants that Seven West announced in February this year.

In today’s update, Seven West Media managing director and CEO, James Warburton commented:

The transformation of SWM continues. Finalisation of the Google and Facebook agreements completes one of the key objectives outlined in our February results, delivering further digital transformation, and realising the true value of our news and current affairs product on third-party digital platforms.

Both of the agreements are expected to initially produce digital revenue before the end of the current financial year. Most of the revenue, however, will come during FY22. Seven West Media anticipates it will need to spend a minimal amount to deliver project revenue.

The Google agreement will run for a period of 5 years, and the Facebook agreement is valid for a 3-year term.

Trading and debt update

In further news appearing to temporarily boost the Seven West share price, the company provided an update on its FY21 third-quarter (Q3) advertising revenue. In its half-year briefing delivered in February, Seven West had advised it expected revenue for the second half to grow by 7% to 10% on its February first-half results. In today’s update, the company reported that Q3 advertising revenue growth had been at the upper end of this range.

Net debt is projected to stand at around $270 million and $280 million by the end of FY21. The company noted that net proceeds of $45 million from the Airtasker Ltd (ASX: ART) initial public offering (IPO) in March were used to repaid debt obligations. In H2 FY21 to date, over $195 million in debt has been retired.

Mr Warburton went on to add:

Our balance sheet is now in a much stronger position and our FY21 Q4 content is positioned to deliver audience and share growth, particularly among people 25 to 54 and on 7plus.

Review of the Seven West Media share price

Seven West Media shares went through a difficult year in 2020, marred by the impact of COVID-19 on the industry. The company’s shares however, have since recovered strongly, posting roughly a 490% gain over the last 12 months. When looking at the year to date, its shares have increased by around 30%.

On valuation grounds, Seven West Media commands a market capitalisation of about $731 million, with 1.53 billion shares outstanding.

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