MediaWorks' TV sale: Wanting to get out of TV is one thing, doing it is another
Friday, 18 October 2019
OPINION: So, MediaWorks has announced it wants to sell its television business, which includes television channel three.
The one snag is that it does not yet have a buyer.
Instead, it has engaged UBS as an adviser to try to find one.
A cynic might question what has actually changed, and be suspicious about the timing of MediaWorks' announcement.
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It has long been assumed that MediaWorks' current owner, United States private equity firm Oaktree, would like to sell out of MediaWorks completely.
While hocking off the company in bits might not be its preferred option, it has probably always been on the table.
MediaWorks has previously threatened to quit television in a letter it sent to a ministerial advisory group in April last year, and which Stuff obtained through an Official Information Act request.
If the 'structural anomalies' in the media market were not addressed 'there is a genuine risk that the Government, through its owned media channels, may become the only broadcaster in New Zealand', that letter warned.
Selling Kiwi media businesses right now is easier said than done.
Australian media and e-commerce company Nine put the sale of Stuff Ltd on the backburner in June after it embarked on a similar sale process and failed to attract bids that it deemed attractive.
There appears some chance that history might repeat itself.
MediaWorks' television business is arguably less marketable than Stuff in that it is already loss-making, despite MediaWorks running a very tight ship.
It would be a brave buyer who reckoned they could do better.
MediaWorks' march towards break-even appeared to get bogged down last year, with the company posting a loss of $5.5m for the year to the end of December – 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.
One potential purchaser that could perhaps turn a dime from MediaWorks' persistently loss-making television business is TVNZ.
A merger of TVNZ and MediaWorks TV would generate the same sort of consolidation benefits that NZME and Stuff were seeking from their merger, but would raise the same the competition concerns and more.
Other candidates could include Sky, which could combine it with Prime and use it as its free-to-air sports vehicle, but same problem might arise.
Spark could buy three and turn it into an outlet for Spark Sport's free-to-air rights, as an alternative to its partnership with TVNZ.
But the problem there is that Spark is averse to getting into news and current affairs, and probably wouldn't want to take the blame for killing off that part of MediaWorks' business either.
Why be cynical about the timing?
Broadcasting Minister Kris Faafoi has been expected to unveil a new media policy next month, after the implosion of former minister Clare Curran's grand plan for a hugely expanded RNZ last year.
MediaWorks has been lobbying Faafoi to give channel three some air by turning TV One into a true commercial-free public broadcaster.
But in a turn for worse, it has seen the Government allow TVNZ to suspend its dividends and run at a $17 million loss this year as it prepares to invest more in digital.
Persuading the Government to change its thinking public media policy to fully factor-in the competing interests of the private sector media has proved hard yakka.
If MediaWorks had simply repeated its threat to pull of TV or out of news broadcasting, that might be seen as 'crying wolf'.
But its statement on Friday that it had put its TV business up for sale was guaranteed to draw more attention and have more impact.
The viable buyers may be too few in number to merit calling in advisers to manage a call for interested parties.
So MediaWorks' announcement may best be viewed in the context of its continued lobbying.
Will MediaWorks really sell its TV business?
Maybe. But the missing bit is 'how?'.