Ads trend trumps Australians

By KARYN SCHERER associate business editor

New Zealand media companies are expecting a 2 to 3 per cent increase in advertising spending this year - well ahead of the trend across the Tasman.

In a report to clients this week, Australian broker UBS Warburg says that the advertising environment in New Zealand is in better shape than in Australia.

While New Zealand advertising campaigns are increasingly controlled from across the Tasman, New Zealand's more buoyant economy appears to have lifted spirits among local media.

Australia suffered a 6.2 per cent drop in advertising spending last year, while New Zealand remained flat.

At its annual meeting in Sydney yesterday, transtasman media company APN News & Media said that national advertising remained weak, but tight control of costs meant it was well positioned to benefit from any recovery.

APN publishes the New Zealand Herald, and regional newspapers in New Zealand and Australia.

The UBS Warburg report says employment advertising is faring better in New Zealand than in Australia, where it is at 15-year lows.

Real estate advertising in New Zealand was also buoyant, it said.

According to the report, APN management remain confident of meeting earnings forecasts this year, through a combination of cover price increases already implemented and cost-cutting.

APN has confirmed that Liam Healy is being replaced as chairman by fellow director James Parkinson.

The company is not expected to put in a bid for free-to-air television channels TV3 and TV4.

The channels' owner, Canadian media group CanWest, said last week that it was selling the channels - and its New Zealand radio networks, RadioWorks and MoreFM.

The Canadian group is struggling with debts after buying Conrad Black's Canadian newspaper assets.

The move could trigger a shake-up of New Zealand media.

APN already owns CanWest's major rival, The Radio Network, and is therefore not seen as a contender for the radio assets.

However, Australian companies Austereo and RG Capital are expected to be interested.

The possible sale of TV3 and TV4 has also sparked considerable speculation as to likely buyers.

Reality television queen Julie Christie said this week that her production company, Touchdown Productions, was "some way down the track" in putting together a group of investors who want to see the channels return to local ownership.

Christie, a prolific producer of shows for local television, said her company was talking to "a number of people" about a possible bid.

While many in the industry are not surprised by her ambition, some have questioned whether Touchdown has sufficient business experience to run a major network.

Others said they doubted a local bidder could match the might of Australian media moguls such as Kerry Packer, who is also believed to be interested.

Packer's Publishing and Broadcasting already controls the Nine Network in Australia, and has an option to invest in Prime TV in New Zealand.

Other potential bidders include Sky TV and Nine Network rival Network Ten, which is also controlled by CanWest.

Australian reports say CanWest hopes to get as much as $240 million for the New Zealand assets.

But many doubt it will achieve that, as the television channels have struggled to make money.

UBS Warburg says that the New Zealand television industry is "currently unprofitable for all players, reflecting, in our view, excessively high programming costs".