Analyst says NZME could be well-placed to take aim at Stuff's heartland. Photo / File
Analyst says NZME could be well-placed to take aim at Stuff's heartland. Photo / File
COMMENT:
The conclusion of protracted merger efforts by NZME and Stuff could fuel rivalry between the companies as the economy trudges through the Covid era.
Research notes released by investment firm Jarden this week suggest that NZME (owner of the Herald) could be well placed to take aim at Stuff'sstrongholds in the regions.
Jarden analyst Arie Dekker said that while it was still possible for the companies to collaborate, it was plausible that the Herald might look to push harder into Wellington and the South Island to compete more aggressively with Stuff titles, while also looking to increase its share of online revenue.
"We view this deal as a reasonably clear indication that there literally was nothing left in Stuff for its owner, with it no doubt happy to move on the lease liabilities, contingent staff liabilities and potentially the operating losses being incurred as advertising takes a hit from Covid," Dekker said.
Stuff has retained the proceeds from the sale of Stuff Fibre, which Dekker noted will give new owner Sinead Boucher time to consider what is next for the business.
But time is limited. And while Stuff grapples with these issues, NZME will be looking at where it can make some market gains.
"As the wage subsidy runs dry for Stuff, there are likely some big changes that are going to be needed if Stuff is to avoid running through the Fibre cash proceeds retained in the business too fast," Dekker said.
Given how long Stuff languished on the market, there has been little recent investment in the online platform. And while NZME has done a good job of rolling out its paywall model, in Dekker's view, Stuff has responded to online revenue challenges by asking for donations.
"The increasingly challenging scale of Stuff's two key mastheads and the underinvestment in its online platform ... are positives for NZME and it is likely to continue to be better placed to attract talent," Dekker said.
He said NZME had "done a good job through this period" by taking early decisive action and reducing production costs – all of which combined in an effective vote of confidence which resulted in NZME negotiating an extension of its loan facilities to July 2023, even given Covid-19's harsh impact on advertising revenue.
But despite having a solid position compared to its competitor, Dekker warned that NZME would not have a clear run.
NZME is not in line for any more help from the wage subsidy, which means its fortunes depend on the recovery of the advertising market.
And with the spectre of Covid-19 not quite vanquished, it remains difficult to forecast how much businesses will be willing to fork out on marketing.
Dekker has an "outperform" rating on NZME, with a target price of 40c. The company's shares last traded at 30c.
One magazine returns as subscribers still wait for answers
Air New Zealand has confirmed the return of its inflight publication Kia Ora.
A spokeswoman for the airline said the magazine would return to domestic flights in August, with Bauer Media still taking care of publishing despite closing its New Zealand offices in April.
Meanwhile, Bauer Media is set for a name change, after the company was recently acquired by private equity group Mercury Capital.
It's understood that Bauer will assign a New Zealand-based team to the publication and that it will be edited by Sarah Henry, who previously served as the editorial director of lifestyle, health, fashion, food and custom titles when the company still had a New Zealand operation.
Bauer Media's advertising arm this week started distributing a digital flyer to media agencies, informing the market that Kia Ora is open for business.
Kia Ora will be available on domestic flights from August. Photo / File
The publication was previously popular with advertisers, but could prove a harder sell amid the chaos caused by Covid-19.
The travel, tourism and hospitality sectors have been among the hardest hit by the outbreak – and businesses operating in this sector will be making do with far tighter budgets than they previously had.
The return of the inflight publication will offer no respite for the thousands of subscribers who are still waiting for answers about when they will start receiving their titles again.
Many Listener subscribers contacted the Herald last week, asking for information about when they could expect their magazine to arrive.
Despite promises from Bauer Media chief executive Brendon Hill that a sale of the New Zealand arm of the business was close, there has been no update or clear indication of when publishing might resume.
Several parties who had shown interest in acquiring some of Bauer's titles expressed frustration at the sales process being managed by EY.
All those involved in the process had to sign non-disclosure agreements, but two parties who spoke to the Herald under condition of anonymity said they had all but given up on the process because everything was moving so slowly.
They suspected Bauer was still hoping to sell all the NZ titles to a single, bigger buyer.
