NZME's Boggs to do shareholder rounds after demerger goes ahead

Thursday 16th June 2016

NZME chief executive Michael Boggs will spend the next 10 days meeting and greeting current and potential investors after APN News & Media shareholders overwhelmingly backed plans to carve out the New Zealand unit.

The Auckland-based publisher and radio network operator will operate as a standalone listed company after the plan to demerge NZME got 99.98 percent backing at today's special meeting in Sydney. The transaction will see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis. The deal then frees up APN to focus on Australian radio and outside advertising business, while NZME can pursue its merger with rival Fairfax New Zealand.

Boggs told BusinessDesk he's about to hit the road to meet current and potential shareholders in Auckland, Wellington, Sydney and Melbourne over the next seven to 10 days to engage and get feedback from shareholders on their views of NZME and where they think the media group should be heading.

"We now can control our own decision making around capital investment and funding," Boggs said. "It's great to be able to have that access again and talk directly to shareholders and financiers."

An area he sees as ripe for opportunity is in digital classified advertising - a traditional source of revenue for newspapers that's been eroded by the likes of online offerings such as Trade Me - and yesterday launched driven.co.nz for automotive classified advertising.

"The thing with us is we have over 3 million people interact with us and our brands every month, and that goes to the credibility of the content being created across all our platforms, whether that be in print, radio, digital or GrabOne," he said. "That gives us that immediate capability and audience to either have a listing or be able to sell to. I don't think you'd have seen that from other businesses when they started in the past."

NZME and Fairfax Media's New Zealand unit have filed an application with the Commerce Commission to merge their businesses, which they claim is needed to fend off global digital advertising giants such as Google and Facebook. The regulator has since said it will look at whether there are separate print and digital markets for both readers and advertisers and if other online offerings are real competitors to New Zealand's stuff.co.nz and nzherald.co.nz websites.

The application shows the merger would only give the combined entity annual digital advertising revenue of about $21 million, just 12 percent of New Zealand's $180 million market which is dominated by Google and Facebook with shares of 37 percent and 16 percent respectively.

APN chairman Peter Cosgrove told shareholders the board also considered keeping the status quo, selling NZME or floating the New Zealand business before deciding the demerger would create the most value for shareholders.

APN intends to pay dividends at a ratio of 40-to-60 percent of underlying net profit, while NZME's ratio is expected to be 60-to-80 percent.

"It is proposed that NZME's first dividend will be considered for the six month period to 30 June 2016," Cosgrove said.

APN chief executive Ciaran Davis said NZME has exceeded earnings before interest, tax, depreciation and amortisation targets, which was $67.5 million in 2015 on revenue of $433 million.

The demerger gives the group flexibility to invest in the entities separately, "allowing them to succeed in their individual markets," Davis said.

APN shares were unchanged at 68 cents on the NZX and rose 2.3 percent to 66.5 Australian cents on the ASX.

The demerger also requires New Zealand Overseas Investment Office approval.

BusinessDesk.co.nz

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