Healthier MediaWorks cautions Government over media policy
Wednesday, 30 May 2018
Television channel Three owner MediaWorks has warned the Government that commercial television could come under more pressure if it doesn't consult widely and think through its plan to boost public broadcasting.
MediaWorks, which is owned by United States private equity firm Oaktree, reported a much improved financial result for 2017, cutting its loss by almost two-thirds to just over $5 million.
Importantly, the company said it was close to replacing a $73 million five-year loan that is due to be repaid in November with a new $95m loan, that would secure the company's funding until at least April 2022.
Chief executive Michael Anderson expected the company as a whole would be profitable this year and scotched speculation there was a 'for sale' sign hanging over any part of the business at the moment.
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But he cautioned that the free-to-air television market remained under a lot of pressure.
'To have the Government owning three TV channels – One, Two and Duke – with no public service broadcast imperative, competing against one independent broadcaster, means you are potentially jeopardising your one point of diversity of view.
'If you ended up in a situation in two or three years where Three didn't exist and the only form of broadcast news was government-owned, with a commercial imperative, it would be a very unfortunate outcome,' he said.
Anderson clarified he was not anticipating Three's demise while explaining it was competing in a market that was 'skewed against us'.
Communications Minister Clare Curran has signalled that the Government is likely to increase public funding for the media by at least $38m a year, after putting aside a $15m 'downpayment' in this year's Budget.
However, its pre-election suggestion that it might allocate most of the extra funding to RNZ so it can get more involved in television has attracted controversy.
Anderson suggested a better course of action would be to make Television New Zealand's TV One channel a non-commercial public broadcasting channel.
TVNZ chief executive Kevin Kenrick said its view was that splitting TVNZ in that way would be in MediaWorks' interest but cautioned it could cost more than $200m a year.
Anderson, who took over as head of MediaWorks in 2016, is being credited with putting the company on a more even keel.
That is following a tumultuous period under former boss Mark Weldon that saw news and current affairs programmes cut and the departures of popular broadcasters John Campbell, Hilary Barry, the 3D team and former TV3 head of news Mark Jennings.
MediaWorks' revenues for the year to December were up 1 per cent at $300m, while its loss dropped from just under $15m to a little under $6m.
'We are not for sale at this point in time – we are not on the market and we are not looking to be broken up. That could change tomorrow or in five years' time – that is an Oaktree issue not ours – but it is not part of anything we are doing at this point in time,' Anderson said.
The company's radio arm had put in a solid, consistent performance, Anderson said, while its television business – while still loss-making – had experienced a turnaround from its previous troubled period and was showing positive 'momentum'.
MediaWorks said in its accounts there was still some uncertainty with regard to its November re-financing.
But Anderson said it had received a 'letter of commitment' from what MediaWorks described as an external funding provider, and he hoped the new arrangement would be finalised in 'weeks rather than months'.
The company's current loan is from owner Oaktree and a banking consortium led by Westpac. Oaktree also put $22.5m of fresh equity into the company in 2016 and 2017.
Anderson would not say whether or to what degree Oaktree was the lender for its new loan, or what the interest rate would be. 'But it's been a normal re-financing process, he said.