TV3's complex history: Sale casts shadow over 30th anniversary

A still from TV3's launch programme in November 1989. Photo / Supplied

Next month TV3 will celebrate 30 years on air. Hopefully.

It's been a hell of a ride, now overshadowed by the sale plans of its US private equity owner Oaktree.

But the current woes are far from its first.

On that basis there must be good grounds for hope that it will find a way to carry on.

Launched on November 28, 1989 by a local business consortium, TV3 was the nation's first commercial channel.

It was quickly listed on the stock exchange at $2.50 a share.

Less than a year later the shares were worth just 10c. The TV broadcaster went bankrupt and delisted in mid-1990.

At that point Canadian media company Canwest bought in, gradually working its way to 100 per cent ownership.

In 2000 Canwest dived deeper into the New Zealand media industry buying RadioWorks – in a deal valued at about $100 million.

By 2004 the radio and TV assets were fully integrated into the company known as MediaWorks.

The same year Canwest partially floated the company on the NZX.

The successful float gave the company a market cap of $350 million. By the end of the 2005 the shares had risen 25 per cent and the company was worth more than half a billion dollars.

These were boom times for mainstream media, with the global financial crisis and social media giants still to emerge.

In 2005, after six years of strong growth, total advertising spend in New Zealand topped $2 billion for the time.

It has more or less plateaued at that level ever since, with the additional problem that foreign tech giants are taking a 30 per cent bite.

In hindsight it looks like Canwest got lucky in 2007 when it sold its 70 per cent stake to Australian private equity group Ironbridge Capital.

Ironbridge then launched a full takeover bid which saw MediaWorks' value skyrocket.

Market estimates at the time had Ironbridge paying between 11 and 12.5 times Canwest's forward earnings (before interest, tax, depreciation and amortisation) - valuing the business at $727 million, including debt.

The bid was successful and MediaWorks was delisted.

Ironbridge was not so lucky.

As Business Herald columnist Brian Gaynor put it, MediaWorks was "leveraged up to the eyeballs" with company debt soaring from $165 million before the acquisition to $769 million afterwards.

MediaWorks' annual interest costs soared from $13.8 million to $92.8 million.

The GFC hit hard and the debt became unsustainable.

By mid-2013, TV3 was in receivership for the second time.

The main MediaWorks office building on Flower St, Auckland. Photo / File

Ironbridge suffered massive losses and the bankers were effectively in charge.

As part of the restructuring, prominent Australian businessman Rod McGeoch was brought in as chairman and reality TV queen Julie Christie joined him on the board.

Current owners Oaktree came in as investors in 2012 prior to the receivership.

Sometimes called a vulture fund because it targets distressed assets, the US private equity group manages investments worth more than $200 billion.

It gradually increased its holding in MediaWorks, revealing it had 100 per cent control in June 2015.

There has been speculation about a sale of MediaWorks ever since - including a break-up of radio and TV assets.

In 2017 Oaktree Capital went close to selling the radio operations to Australia's Southern Cross Austereo, but scuppered the deal at the last minute by insisting that Southern Cross Austereo also had to buy the TV arm.

What now? Well, the lack of an obvious buyer for TV3 has commentators fearing the worst and talking of closure.

But if TV3's complex and convoluted ownership history (this was just the abridged version) tells us anything, its that the station is a survivor.