Television channel Three owner MediaWorks rules out buying Stuff

Wednesday, 22 May 2019

Television channel Three owner MediaWorks has ruled out buying Stuff Ltd from Australian owner Nine.

Chief executive Michael Anderson said TVNZ should also not be allowed to buy Stuff, saying that would be a 'really problematic outcome'.

Anderson said he would expect the Government to consult MediaWorks if a purchase of Stuff by TVNZ was a serious possibility, but admitted it was not clear how that could be allowed.

He made the comments as MediaWorks reported a little-changed net loss of $5.5 million for the year to December and revealed a NewsHub restructure that leaked last week was not expected to result in the departure of any big-name presenters.

**READ MORE:

* Nine says Stuff may not be sold by end of June   

* Minister reassures media over 'plurality'

* MediaWorks boss Michael Anderson says QMS merger shows it's not a 'victim'**

Stuff was put up for sale by Nine earlier this year, with a decision on the business' future not now expected before the end of June.

MediaWorks, which is owned by United States private equity company Oaktree, was tipped by media pundits as a potential buyer of Stuff.

A merger would have created a business with interests spanning television, radio, online, print and outdoor advertising.

But Anderson ruled out a purchase.

'I can say categorically we are not exploring Stuff,' he said.

TVNZ chief executive Kevin Kenrick stoked speculation that the state-owned broadcaster might instead acquire at least the online business of Stuff in February.

Kenrick said after a select committee meeting that it would be 'inappropriate' for him to say if TVNZ might be in the market for Stuff.

But he went on to say that TVNZ was ready to make some 'bigger bets' and would look at anything that could assist its efforts to build up its online local news reporting presence, which he said had to be key to the broadcaster's future plans.

TVNZ spokeswoman Rachel Howard said on Wednesday that it had no further comment.

Broadcasting Minister Kris Faafoi did not rule out a TVNZ purchase being among a large number future scenarios in April.

'All I can say there is we have spoken about all of the different permutations that TVNZ might have. It would be extremely unwise for me – when there is an active consideration of Stuff in the market – to go into any detail,' he said then.

Anderson said Government involvement in the media in New Zealand was 'already causing significant issues'.

'Increasing that ownership would be absolutely going in the wrong direction,' he said.

MediaWorks had made that known to the Government but 'not in strident terms' because he hadn't necessarily considered it would be a serious proposition, he said.

He hoped MediaWorks would be consulted if TVNZ might buy Stuff, but agreed it was not clear how that could be allowed.

That highlighted the complexity of government involvement in the media, he said.

'On the one hand the Government has a responsibility to try and support the independence of the media and a healthy media. On the other hand, it is trying to maximise its profit out of TVNZ.

'They should consult us because we would be potentially significantly impacted. But on the other hand it is a commercial transaction and they couldn't consult us. Therein lies the conflict that we keep highlighting.'

Anderson said he did not want to comment on how MediaWorks would respond to a TVNZ takeover of Stuff 'unless it becomes something that we really do need to address'.

He had no views on what should happen to Stuff but said he hoped the sale process went well and that there would be 'an outcome that is appropriate'.

MediaWorks' march towards break-even appeared to get bogged down, with the company posting a loss of $5.5m – just $200,000 down on its loss in 2017 – despite cutting its costs by just over $2m.

That came after the company slashed its losses from nearly $15m in 2016.

But Anderson said the result was not the 'steady as she goes' performance that the tiny improvement in its bottom line implied, pointing to a 'double digit' improvement in its underlying operating profit, which was up 14 per cent at $25m.

Staff in MediaWorks' Newshub integrated newsroom were called into meetings last week to discuss changes that it was understood could lead to fewer than five redundancies.

Anderson confirmed there would 'not be many redundancies' and indicated presenters were not in the firing line.

'I am not anticipating any changes that you will see on air,' he said.

MediaWorks' result for the year to December 2019 should be transformed by its planned takeover of the New Zealand arm of Australian outdoor advertising business QMS, which Anderson expected to be completed within the next 'couple of months'.

QMS – which will then own 40 per cent of the enlarged MediaWorks business – forecast last month that MediaWorks would report revenues of $335m to $340m for 2019 and a substantially higher operating profit of at least $40m.

But Anderson was still not forecasting a net profit this year.

'I prefer to think of it as a journey rather than destination we can put a point on,' he said.

'It is the year where we are preparing for what we would hope would be a very strong 2020 ahead.'

Revenues from MediaWorks' television business rose 3 per cent to $134m last year, but revenues from its radio business fell 3 per cent to $154m, reversing the trends in the previous year, with total revenues up less than 1 per cent at $302m.

Anderson said the decline in radio appeared to be a 'blip' that had reversed this year, and 'not part of a trend'.

MediaWorks said 41 per cent of the programming it broadcast on television channel three between 6am and midnight was locally-produced – a slightly higher proportion than TVNZ's 38 per cent.