Sky TV terminates talks over buying MediaWorks
Wednesday, 15 June 2022
Sky Television has decided not to buy radio and outdoor advertising business MediaWorks.
The company surprised analysts and shocked investors last week by saying it was in exclusive talks to acquire the company.
Sky said on Wednesday evening in an announcement to the NZX that it had “ceased discussions to evaluate the possible acquisition of MediaWorks”.
The company indicated that it was instead likely to return excess cash to shareholders and concentrate on its core business.
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“As previously communicated, in parallel with its evaluation of potential investment opportunities, Sky has been exploring options to return capital to shareholders and accelerate organic investment in the business to drive further growth,” it said.
Sky said it would update shareholders on its capital management plan no later than on August 25, when it is due to release its full year results.
Sky TV shares fell sharply after it originally announced on Tuesday last week it was in talks to buy MediaWorks, prompting speculation that it might not get shareholder approval for a deal.
It is understood the hostile response from shareholders to the proposed acquisition was a factor in Sky deciding to change tack.
The announcement of the end to talks was met with instant relief among posters on investor site Sharetrader.
“Sanity prevails, onwards and upwards from hereon. No more silly plays by the Board. Just announce buyback or dividend and reward the shareholders,” one said.
MediaWorks owns about half the country’s commercial radio stations but reported a loss of $2.9 million for the year to the end of December and a loss of $4.8m the prior year.
But analysts had speculated that buying MediaWorks could have cost Sky about $300m, once debt that was on MediaWorks’ books was included.
MediaWorks’ majority owner, United States private equity company Oaktree, is believed to have been looking for ways to exit the business, after selling MediaWorks’ television arm, which includes television channel Three, to Discovery for $20m in 2020.