Seven sheltered from advertising slump


The popularity of television hits such as Grey's Anatomy and Desperate Housewives and Lost has insulated Seven Network Ltd from a slowdown in the TV advertising market.

Seven Is experiencing good revenue and earnings growth but refused to be drawn on whether this momentum would allow it to overtake Nine Network as the number one television broadcaster in 2006.

Chief executive of broadcast television David Leckie said Seven would not make any predictions.

"We're going to say we probably, hopefully will go a bit better - who knows - but we've got a platform we can launch a lot of stuff off," Mr Leckie said after the network's annual general meeting on Friday.

The television advertising market is expected to slow to about three to four per cent growth in calendar 2006.

"But Channel Seven is insulated from that because of our ratings, so we're experiencing good growth, Mr Leckie said.

Lost and Desperate Housewives aren't on air at present but advertisers are keen to piggy back on their expected ratings success when they return next year alongside Grey's Anatomy and new US shows.

Mr Leckie said Seven had become adept at selling advertising spots at a premium since building its programming depth.

Executive chairman Kerry Stokes said Seven remained committed to its $1.1 billion law suit against 22 parties, including News Ltd and the Australian Football League (AFL), over the demise of Seven's pay TV sports channel C7 in 2001.

With the trial underway, Mr Stokes would not say how Seven would respond to a call by Justice Ronald Sackville for out-of-court mediation between the parties.

But commercial director Bruce McWilliam said Seven was considering the judge's request.

"We will address the judge's comments when we resume on Monday, because he will be asking all parties to respond, I think," Mr McWilliam said.

Seven previously foreshadowed spending about $27 million on its C7 legal action in fiscal 2006, with that cost heavily weighted to the first half.

On Friday, Mr McWilliam said Seven expected legal costs to be $25 million to $30 million in the first six months of the year.

Mr McWilliam would not comment on the progress of Seven's joint bid with Ten Network for free-to-air broadcast rights for the 2007-2011 AFL games.

The games are potentially worth at least $500 million.

Mr Stokes said Seven's television and magazine businesses are on track to post a 40 per cent increase in group interim earnings, excluding unusual items, up from $89.8 million in first half 2004/05. theage.com.au