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Three not failing, just needs a new owner - MediaWorks CEO

Friday 18th October 2019

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MediaWorks Investments' free-to-air television network isn't a failing business but needs a new owner to navigate a market skewed in favour of state-owned Television New Zealand, chief executive Michael Anderson says. 

He has been a critic of successive governments' broadcasting policy settings, saying that has given TVNZ a leg up over its private free-to-air rival. 

"All that privilege built up over the years has skewed the market. Whether it be dividend relief, whether it be the granting of no debt, whether it be the new premises, whatever it is, gradually over the years it's enabled a stronger and stronger and stronger position for TVNZ to take," he said. 

MediaWorks had been lobbying for structural change to focus government-owned media groups on public service broadcasting, and free up the private player to mop up leftover ad revenue. It was previously successful in securing relief, such as when it was allowed to defer payments to the government for radio spectrum licences. 

However, recent polling by CT New Zealand - the local arm of pollster Crosby Textor - showed little appetite for a government bailout of Mediawork's Three TV business, with just 16 percent of respondents in favour. Some 58 percent said the government should not intervene even if that meant Three would stop broadcasting. 

The private equity-owned media group today bit the bullet and hired investment bank UBS to find a buyer for Three. However, Anderson rejected speculation that, if a deal can't be done before Christmas, the network will be closed. 

MediaWorks has made headway into the problematic TV business during the past three years, with Anderson claiming significant improvements at an operational level, such as through higher ratings, a better share of revenue, and more number-one programmes. 

However, a recent sharp revenue decline "really brought home the fact that, despite all those operational improvements, it is very difficult to overcome those structural challenges," he said. 

"This is not a failing business. It is a well-performing business within a structurally challenged market," he said. 

MediaWorks came to the conclusion that it's not the best owner of the network to create a sustainable business, and that a one-off cash injection won't cut it. 

The group is open to all potential buyers, and Anderson said they intentionally didn't test the usual suspects to make sure everyone was treated equally. 

While the sale process won't be open-ended, Anderson said neither will be it rushed. 

"We are going to give this process the time it needs to truly satisfy ourselves that we've found the right buyer," he said. 

The Auckland property will be sold separately with a leaseback arrangement for multiple years, meaning any new owner of the TV business can keep operating from that site. 


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