MediaWorks receivership could be first move in a long running play that returns more assets to local ownership.

Is the MediaWorks receivership simply the first move in a long-running play that will ultimately return more media assets into New Zealand ownership?

Already there is a frisson of excitement around Auckland investing circles, with a great deal of speculation on whether the new owners might pursue an IPO on the NZX at some stage down the track, particularly while the NZX is in a happy space and there is renewed confidence in share market investing.

With the right sort of shareholding structure in place - that is not indebted and pursuing cost-cutting at the expense of investment in growth - it is speculated that the owners of MediaWorks' broadcasting assets will demonstrate the kind of risk appetite that will result in TVNZ and Sky TV getting a run for their money on all fronts.

If so, we could be in for a much-needed renaissance within the local media industry.


Here's another thought.

What if, for instance, the NZ Super Fund takes a strategic stake in the new MediaWorks ownership company?

The fund could repeat the role it played in consolidating Shell's assets, now held by Z Energy, into New Zealand ownership and stopping Auckland International Airport from falling into foreign hands when it combined forces with Infratil to mount a blocking move.

If the Shell assets and Auckland International Airport were considered to be so central to New Zealand's future, and obviously a good long-term investment, why not the media industry with its huge role in nationhood?

New Zealand media companies have been up against it in recent times. It's not because their underlying businesses are not profitable. Mostly they are.

As MediaWorks receiver Michael Stiassny stressed yesterday, that particular company - which owns TV3 and TV4 and a host of radio stations including the RadioLive network, MoreFM and The Rock - is profitable.

As Stiassny noted, it was the debt structure which killed the company - "too much weight".

Major shareholder Ironbridge and significant equity holder Goldman Sachs have paid the price. Their investment is wiped out.

The banking syndicate has taken a haircut and a new company chaired by Australian director Rod McGeoch has been formed to run the show.

Stiassny has pledged the ownership transition will run smoothly.

Pulling the plug on MediaWorks by putting it into receivership before the new company takes control of the profitable assets works well from a tax perspective for all players.

There is doubt whether Inland Revenue will ever get to see the $22 million it says that MediaWorks still owes from a convertible notes deal.

IRD released its own statement on the MediaWorks receivership saying it was unable to comment on individual customers due to taxpayers' confidentiality.

"However, we will generally look at these type of matters closely," the department said.

New Zealand First's Winston Peters has added fuel to that fire by saying the receivership should not be used to escape a tax liability and break other international contracts.

This aspect will play out - but Peters does have a point.

But it is the skill and determination of the new players that now counts.

McGeoch is a tough customer with an avuncular manner. He can be an inspirational and unifying force, most famously evidenced when he spearheaded Sydney's successful bid to host the Olympics.

He is a full-on networker.

As co-chair of the Australia New Zealand Leadership Forum, he has long been plugged into a senior Australasian network of movers and shakers who have an interest in the bilateral relationship.

And he has made full use of those contacts as was evidenced in SkyCity's successful pursuit of the convention centre deal.

This is good news as far as MediaWorks' staff and customers are concerned. They need some strongly committed commercial players at board level. Persuading former Touchdown chief executive Julie Christie to be a director on the new ownership company's board was a stroke of genius.

More so if Christie follows through by buying an equity stake herself.

Having skin in the game - but not too much, as Ironbridge found out - will ensure the right commercial incentives exist at board level.

But it's so far unclear just who is putting up the cash to buy the company, apart from the bankers with their debt-for-equity swap.

This will play out.

But what is also of great interest is whether the New Zealand assets of Australian companies APN News & Media, owner of the Herald, and Fairfax will come on to the block. Both Australian companies are looking to reduce their debt ratios.

And in the Herald's case, it is seen as a plum media asset and of strategic importance to New Zealand.

Interestingly, the shareholders in APN's own major stakeholder - Independent News and Media (INM) - this week voted in favour of its plan to dispose of its South African assets.

INM earlier announced a consortium of eight banks had agreed to write off almost €140 million ($233.9 million) of its debt as part of a wider restructuring which would see the group reduce its net burden from €424 million to €118 million. INM will also raise about €40 million in new equity in a rights issue.

INM is expected to make €167 million from the sale of its South African business.

Once the South African assets have been disposed of it would be only natural for the INM board to focus on whether it wants to retain all or part of its APN investment, including New Zealand assets.

Fairfax's Australian ownership structure remains under stress.

Investment bankers are thinking through some options in relation to both companies.

While it's still watch-this-space for our major media companies, unfortunately it is not the case for a number of smaller titles. Horton Media has canned the Truth and Fairfax is closing three computer titles.

While sad for the journalists and editors - who laboured hard to keep the titles afloat - it is a sign of the times.

A word also on Tony Timpson's death. The former Cavalier Corporation boss put up the cash to start business weekly, the Independent, which launched in the early 1990s. The title was closed after it later came under Fairfax ownership.

But I do believe there are other business people out there who believe in the value of newspapers to society and will invest in these assets.