Television channel Three owner MediaWorks posts big loss

Friday, 12 June 2020

Media company MediaWorks is selling its TV business - including Three. (Video first published in June 2020)

Television channel Three owner MediaWorks has posted a much-increased loss of $25 million for the year to December and says it faces an uncertain future.

The loss was up from $5m in 2018 and will not reflect any of the impact of the Covid 19 pandemic which has taken a big chunk out of media firms' advertising revenues since March.

The company said in accounts filed with the Companies Office that it expected to breach its covenants with lenders beyond June because of declining earnings, and it was working to secure revised terms.

Because discussions with its lenders about waiving and resetting its covenants had been 'positive', it had prepared its accounts on the basis that it was a going concern, it said.

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MediaWorks has more recently taken a hit from reduced advertising as a result of the coronavirus.

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But there remained uncertainties over whether it would be able to renegotiate a deal, it said.

'The uncertainties may cast significant doubt on the group's ability to continue as a going concern,' its report to the Companies Office stated.

MediaWorks began consulting with staff in May on a proposal to axe 130 jobs, and in April asked all its staff to take a voluntary pay cut of 15 or 20 per cent.

All New Zealand's major privately-owned media businesses have been facing turmoil this year.

Stuff was sold by its Australian owner Nine to Stuff chief executive Sinead Boucher for just one dollar last month.

Peter Cullinane, the chairman of The New Zealand Herald owner NZME, suddenly stepped down on Thursday after losing the support of a large group of Australian fund managers.

NZME was forced to fight off a rebellion from disgruntled Kiwi shareholders seeking to break up the business.

Both Stuff and NZME have also asked their staff to take a voluntary pay cut of 15 per cent over 12 weeks.

MediaWorks is currently attempting to sell its television business which has posted persistent losses and which includes its Newshub journalism arm.

It said in its account that negotiations were underway with a number of potential buyers but were at an 'early stage'.

Its other major assets include about half the country's commercial radio stations and a New Zealand outdoor advertising business acquired last year from Australian firm QMS.

MediaWorks is believed to be the single largest beneficiary of a $50m government support package announced in April that will see taxpayers pick up its television and radio transmission bill for six months, and which removed the need for the company to contribute to NZ On Air for a year.

It has also received $8.6m from the Government's post-Covid wage subsidy scheme.

Broadcasting Minister Kris Faafoi is expected to announce a second round of assistance for the media sector within the next few weeks.

A MediaWorks spokeswoman said the bulk of its losses last year were due to a 'precautionary' $21m write-down of its TV assets in preparation for their sale.