More turbulence possible for MediaWorks as buyer eyes its 40% shareholder QMS

Sunday, 27 October 2019

Prime Minister Jacinda Ardern responds to MediaWorks' announcement in October that it would look for a buyer for its TV business.

Television channel Three owner MediaWorks faces the prospect of more change, this time on its board, as a private equity firm circles its minority owner.

Australian-listed outdoor advertising company QMS Media acquired a 40 per cent stake in MediaWorks in September as a result of deal that saw MediaWorks take over the New Zealand arm of QMS.

The deal reduced the shareholding of United States private equity firm Oaktree in MediaWorks from 100 per cent to 60 per cent and gave QMS two seats on MediaWorks' board of five directors.

QMS suspended trading of its shares on the Australian stock exchange on Friday pending an announcement about a transaction involving all or part of the company.

* TV3 'a good business' struggling in a skewed market, says MediaWorks boss

* Three owner MediaWorks to take over NZ arm of Australia's QMS**

The Australian Financial Review reported that Australian private equity company Quadrant Private Equity was the potential 'mystery buyer' of QMS, which is valued on the ASX at A$344m (NZ$370m).

MediaWorks news chief Hal Crawford will leave in February, adding to the uncertainty at Newshub.

Quadrant owned a half share of outdoor advertising company APN Outdoor before listing it on the ASX in 2014.

MediaWorks announced earlier this month that it had instructed its long-standing adviser UBS to begin soliciting bids for its loss-making television arm.

Industry insiders speculated its television channels were likely to continue in some form, given MediaWorks owns radio spectrum licences that give it the ability to broadcast free-to-air television through to 2033.

But the proposed sale has cast a questionmark over the future of MediaWorks' journalism business Newshub, which is a major cost base for the company.

MediaWorks news director Hal Crawford announced on Wednesday that he would leave the company in February.

Newshub produces news bulletins for both MediaWorks' television channels and its commercial radio stations, which MediaWorks plans to retain, as well as for Sky channel Prime.

One option might be for MediaWorks to pay a buyer of its television business to continue to provide news bulletins for its radio business under contract, should they decide to retain Newshub.

Such an arrangement would not appear unusual.

But a sale could also open the door for its radio business to buy in news from another source.

MediaWorks has not provided public comment on the options.

But chief executive Michael Anderson has scotched suggestions that its television business could close before Christmas if a buyer is not found, indicating the sale process would be allowed to run for longer than that and does not have a hard deadline.