NZME says new merger deal would be 'up for discussion' after time

Tuesday, 25 February 2020

Media company NZME said protections for journalists' jobs in its proposed merger with Stuff could be up for review after a set time period.

The owner of the New Zealand Herald, Newstalk ZB and ZM has announced a heavy full year loss, weighed down by $175m of impairments to reflect its share price.

The company reported a full-year net loss of $165.2 million to December 31, compared to a net profit of $11.6m in 2018.

Excluding the writedowns, NZME noted that operating profit was up 4 per cent to $19.7m.

* [NZME's 'Kiwishare' plan to buy Stuff takes leaf from 1980s and 1990s privatisation playbook

](https://www.stuff.co.nz/business/117538857/nzmes-kiwishare-plan-to-buy-stuff-takes-leaf-from-1980s-and-1990s-privatisation-playbook?rm=a)* Stuff reports net profit at $5.5m as doubts linger over NZME merger revival**

NZME publishes the NZ Herald and owns the company that runs Newstalk ZB and ZM.

Chief executive Michael Boggs said the impairments were an accounting measure to align with its current share price, and would make no impact on its cash flows or bank covenants.

NZME's share price has lost almost third over the last year, although it gained a cent to 34c this morning.

Boggs said that although the media remained still under pressure, he believed NZME's strategy to combat falling revenues in traditional print media was working.

Nevertheless, the pressures facing journalism continued as big international players siphoned away advertising.

'There simply aren't enough advertising dollars and not a large enough audience market to sustain New Zealand's current industry structure'.

NZME has twice proposed buying its domestic rival Stuff, owner of the Stuff website and several publications including the Sunday Star-Times and The Press.

NZME has made a fresh bid for rival media firm Stuff under a ''Kiwishare'' proposal which would protect each firm's media decisions.

The first bid failed because of concerns from the Commerce Commission that it would lessen the plurality of voices in the media. However, a revised plan would entail buying Stuff from its new Australian owner Nine, and ringfencing the editorial operations of both companies.

Stuff would be put into a separate company, of which the Government would take a share.

While there was no further news on the plan, Boggs said there had been encouraging progress.

Asked what NZME's commitment would be to the proposed new entity, he said the Kiwi Share agreement would protect jobs and operations for a certain period of time, but not forever.

'The way we anticipate it is the Kiwi Share would be an obligation well into the future but a number of those metrics would be open to discussion, based on market dynamics.

'And fundamentally into the future, if there is stronger competition in the market, digital platforms that are delivering strong competition to the combined NZME and Stuff, it may mean that a Kiwi Share is not required.'

NZME chief executive Michael Boggs said the company has made good inroads on its debt.

During the year, NZME paid off a significant amount of net debt and will withhold its dividend so that can continue. Net debt fell to $74.7m from $98.3m the year before.

However, the continued drop in newspaper revenue and a dip in agency advertising saw overall revenue fall 4 per cent to $371.7m.

Print revenue fell 8 per cent to $192.4m, while its radio revenue grew 2 per cent to $110.9m. Digital revenue rose 1 per cent after the Herald introduced a subscription for selected content.

It said it now had 20,000 digital subscribers, compared to 15,000 in August.

In the year ahead, Boggs said a recovery in real estate listings and new digital opportunities were bright spots.

'I think what we've seen in the last year is many businesses trialling Facebooks and Googles, as they have for a number of years but they're realising they still need a bigger brand presence, so we are seeing them return to fundamental digital advertising on sites like ours,' Boggs said.

Google's recent announcement that Chrome would remove all third-party 'cookies' from its site would play 'right into organisations like us that have large registered [data] bases'.

Although NZ First leader Winston Peters has thrown his party's support behind NZME's Kiwi Share plan, Commerce Minister Kris Faafoi has ruled out legislation to bypass the Commerce Commission.