"NZME firmly believes it is the right owner for Stuff," Boggs said in a statement.
"We expect that, as well as supporting NZME's strategic priorities, the potential acquisition of Stuff would create a stronger and more sustainable media presence, enhance our audience and advertising proposition, deliver cost savings and synergy benefits and deliver increased financial scale."
This has been NZME's argument in favour of a merger all along.
Boggs said the obligations would be over a certain time period and, while the Kiwi Share obligation would remain, the agreed metrics could be revisited depending on the market dynamics at the time.
"If there is strong competition in the market, digital platforms that are delivering strong competition to a combined NZME and Stuff, it may mean a Kiwi Share is not required," Boggs said.
NZME's spending on one-off projects jumped to $2.7 million in calendar 2019 from $1.6m in 2018. The 2019 expenditure included ongoing work from its pursuit of Stuff, as well as the cost of its disposal of Ratebroker and old underpayments of holiday pay.
That's in a year when NZME reported a loss of $164.7m compared to a profit of $11.7m a year earlier. The loss was largely due to $175m of impairment charges on the company's goodwill, mastheads, and brands. It valued those intangible assets at $150.3m at the balance date.
Stripping out those impairment charges and the impact of new accounting standards, operating profit was up 4 per cent at $19.7m as the media company cut costs by 4 per cent to $321m. Revenue fell 4 per cent to $371.7m.
NZME shares hit a record low 32.5 cents yesterday, and ended the day at 33 cents. The shares are up 6 per cent in early trading today, at 35c.
NZME said it believes it's the right owner for Stuff, and that acquiring it would create a stronger and more sustainable media presence, create a more valuable advertising and audience proposition, allow for cuts in back-office functions, and increase financial scale.
"No agreement in relation to the transaction has been reached, however, we continue to progress towards the required regulatory approvals," NZME said in presentation slides.
Nine Entertainment Co, Stuff's owner, is due to report earnings tomorrow.
NZME managed to shore up its balance sheet despite the red ink, reducing net debt to $74.7m from $98.3m a year earlier. That helped it reduce its ratio of earnings before interest, tax, depreciation and amortisation to debt to 1.5 times from 1.8 times, despite a 7 per cent decline in ebitda $50.6m.
Operating cash inflow rose to $47m from $21.8m in 2018, and NZME trimmed its capital spending to $11.8m from $14.1m. It has suspended dividend payments while it repays bank debt.
Boggs said print remained the challenge for NZME, with advertising revenue down 10 per cent at $102.2m and circulation revenue falling 6 per cent to $76.3m. Earnings were down 9 per cent at $123m.
Radio performed well, with ad revenue up 2 per cent at $110.9m and earnings were also up 2 per cent at $71.5m.
"We will continue to focus on radio growth and recently announced significant host changes to some of our radio brands to capitalise on the audience growth delivered in 2019," Boggs said.
Digital ad revenue shrank 4 per cent to $45.9m, while classified revenue from its OneRoof and DRIVEN property and motor listings services reported revenue of $3.2m, up from $900,000 a year earlier.
The new subscription revenue from NZME's premium Herald product was $1.7m for eight months, with 21,000 paying digital subscribers.
- BusinessDesk
