Friday 18th October 2019
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MediaWorks Investments has given up on television, putting the free-to-air broadcaster and its Auckland head office and studios on the block.
The media group has relied on the profitability of its radio business to offset ailing fortunes from the TV arm, and finally waved the white flag and hired an advisor to try to sell the firm. It will work to find a list of potential buyers and start initial discussions, followed by a due diligence process.
“We are in a commercial environment and have to face commercial realities. The market that free-to-air television operates in is tough and has been exacerbated this year," chair Jack Matthews said in a statement.
"This is reflected in the performance of all free-to-air television operators in New Zealand, not just us. Clearly the market - alongside the structural hindrances we operate under - has a larger impact on Three, given its genuine commercial imperative.”
The company's 2018 accounts showed a marginal improvement on the year-earlier with an annual loss of $5.5 million as revenue inched up to $305.3 million. Its TV revenue increased 3.4 percent to $133.7 million and, while radio revenue dipped, it was still the main contributor at $153.8 million.
MediaWorks said it will keep the radio business and the QMS outdoor advertising business, which it bought from ASX-listed QMS Media for A$35 million plus a 40 percent stake in MediaWorks. The New Zealand QMS operation reported a profit of $4.3 million on revenue of $43.3 million in calendar 2018.
"We are in the fortunate position of having two very strong growth platforms in radio and outdoor that deliver both revenue and margin growth. Our focus now is to accelerate the opportunities that exist for those platforms," Matthews said.
Broadcasters around the world are facing a landgrab for content with online streaming services such as Netflix bidding up the cost of content. Entertainment giant Disney will launch a streaming service in the coming weeks and Apple TV Plus is also on the way.
That's made it hard for free-to-air broadcasters at a time when linear TV advertising is shrinking, and MediaWorks chief executive Michael Anderson has previously signalled that the firm would quit TV if the government didn't change its policy settings. He has been an ardent critic of rival Television New Zealand's commercial mandate, which sees it compete for advertising dollars.
"The role Three plays in New Zealand society is significant, from Newshub through to investment in local comedy and drama. We believe MediaWorks TV is now in a place where it can be separated from the radio and outdoor business to be operated under a new owner in a more sustainable fashion - and, ultimately, for profit," he said today.
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