TPG seeking control of MediaWorks through a backdoor takeover
TV3 is hiring extra news staff amid background rumblings over its corporate ownership. MediaWorks owns TV3 and attracts half of the country's commercial radio audience. MediaWorks is owned under a complex private equity structure that funded Ironbridge Capital's purchase of MediaWorks for $790 million, an extraordinarily high price paid at the height of the leveraged buyout boom. Senior debt is estimated at $388 million. Another private equity company, TPG, is working on a backdoor takeover buying debt at a discounted price.
If successful, TPG might shut Ironbridge and other second tier debtors out of the company. It could reduce its high debt loading and interest payments, although the makeup of TPG's possible ownership structure is not yet clear. Before Christmas TPG had owned about 20 per cent of MediaWorks' senior debt, it is understood. Other senior lenders including BNZ, Westpac, Bank of Scotland International, which is now part of Lloyds Banking Group, JP Morgan and Rabobank, will be assessing whether they should sell their debt to TPG at a discount - removing their exposure to the challenging future for the company.
MediaWorks has a further $97 million of subordinated debt held by Halifax Bank of Scotland, Royal Bank of Scotland and Ironbridge. These debts could, in theory, be wiped out if TPG takes control through its back door takeover. MediaWorks also owes taxpayers around $30 million on 11.2 per cent interest under a controversial delayed payment loan with the Government for 20-year rights to radio frequencies.
How would MediaWorks be run if TPG won control? A source familiar with TPG's approach said that traditionally TPG operated investments by having two people keeping track of investments. Beyond the issue of interest payments which might be allayed under a new structure - it is likely any new structure would seek to introduce more management experience, especially to the television division. Who would TPG turn to? The most experienced and underused media executive in New Zealand is Brent Impey, the former chief executive of MediaWorks who has an intimate knowledge of the company.
But he fell out with Ironbridge. One source said if the TPG takeover was successful and they brought Impey on board, he might turn up as chairman of the company rather than in a management role. Impey is a director of Yellow Pages - a company bought for too much during the leveraged takeover boom - that has subsequently been taken over by senior bankers, leaving many other investors out of pocket.
TVNZ's decision to appoint another Australian to run its news and current affairs operation has gone down badly with some staff, say newsroom sources.
TVNZ national bureau editor Cliff Joiner - who applied and missed out on the top job - resigned to produce Marcus Lush's show on Radio Live.
It is understood another youthful high profile front person was told not to apply. Beyond them, other TVNZ sources worry top New Zealand journalism posts have become a stepping stone for Aussies on their way to being news bosses back home. Ten Network Sydney news editor Ross Dagan - who takes over at TVNZ in April - is said to be highly competent, a good manager and well liked.
But for the second time in a row, the head of TVNZ news and current affairs has been handed to a low profile mid-run Aussie newsman. There has been no attempt to groom a local successor to Anthony Flannery. At what point does the job become permanently a stepping stone for Aussie commercial TV executives? And combined with TVNZ's heavy reliance on American news consultancy Magid - and its heavily produced American style of bulletins - is there any hope for New Zealand developing an indigenous style of newsgathering?
TVNZ is in limbo land partly due to the timing of chief executive and editor in chief Rick Ellis's departure next month and chairman Sir John Anderson stepping down in April. A political source said Anderson - who fixed a dysfunctional board of governors - has never had much love for the state broadcaster. Rumours persist it will be sold, but indications are the transmission company Kordia - which owns broadband, phone, and other internet services provider Orcon - would be up earlier in the next round of asset sales.
Anderson will spend his last days looking for a replacement for Ellis's replacement, who will report to a new chairman. Ellis was also editor-in-chief of TVNZ. After several months when TVNZ has had no head of corporate affairs, Dean Schmidt will take over next month. Schmidt will report to a new chief executive. TVNZ is also starting also the New Year with no arrangements in place for replacing Guyon Espiner as head of the TVNZ press gallery. Espiner defected to TV3.
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