Broadcaster MediaWorks has reached a binding agreement with media giant Discovery Inc regarding the sale of MediaWorks' free-to-air TV business.
The transaction is subject to a number of pre-completion approvals and is expected to be completed by the end of the year, the company said in a statement. No sale price was disclosed.
Nasdaq-listed Discovery Inc has a market cap of US$10.89 billion ($16.2b). In 2019, it made a net profit of US$1.5b on revenue of US$11.1b.
The deal includes entertainment channels Three and Bravo, streaming service ThreeNow, and multi-platform news and current affairs service Newshub, as well as other channels Three+1, Bravo+1, The Edge TV and The Breeze TV.
"I believe Discovery is the ideal new owner to continue that momentum across the TV business, MediaWorks chairman Jack Matthews said.
"The sale will enable MediaWorks to have a greater strategic focus on the long-term future growth of its highly successful and market leading radio and out-of-home business, offering effective advertising solutions to our customers and great news and entertainment to our audiences."
In an internal note to MediaWorks staff, outgoing chief executive Michael Anderson said under the ownership of Discovery, Three, Newshub and Bravo will have a long-term home and continue to play a vital role in New Zealand society.
"The MediaWorks radio and outdoor businesses are not part of this sales process and will continue to operate under the current ownership structure," Anderson said.
"We will transition any remaining teams to Hargreaves St in the coming months which will be the home of radio and outdoor for years to come."
MediaWorks staff are being further briefed on the transaction at 10am this morning.
"I want to reiterate our commitment to support each of you through this process," Anderson said.
MediaWorks claims to be New Zealand's largest independent broadcaster, with an audience of more than 4 million across its television, radio and digital platforms. The company put the unprofitable television division up for sale in October last year.
In June the Herald reported that Discovery Inc was a font runner to buy the TV arm of MediaWorks.
Discovery has been active in the local market recently, last year picking up Top TV, which operates the Choice and HGTV channels in this market.
It also has a close partnership with pay-TV broadcaster Sky, which airs the Discovery Channel among its suite of entertainment options. In 2016, it tipped millions into Auckland-based RugbyPass, which in turn sold to Sky TV in an August 2019 deal worth up to US$40m.
Founded in 1985, Discovery is a multi-billion-dollar mass media giant employing over 9000 around the world. In addition to the Discovery Channel, it also owns and operates Animal Planet, the Food Network and range of other media properties.
In New Zealand, Discovery operates a portfolio of six pay-tv channels including Discovery Channel, TLC, Animal Planet, Food Network, Living and Discovery Turbo and two free-to-air channels HGTV and Choice TV.
Simon Robinson, Discovery President APAC, said: "This is an exciting moment for Discovery. MediaWorks TV is New Zealand's leading independent free-to-air commercial broadcaster, with popular shows and great brands.
"With a 26-year heritage in the New Zealand market, we are committed to drive MediaWorks TV's future growth and success, delivering increased value to audiences and advertisers across all screens in New Zealand."
MediaWorks flagged the sale talks when reporting a $25.14 million loss for the year to December.
The loss was largely attributable to an impairment of $21m, including a $12.13m write down on property, plant and equipment assets.
In May the company announced 130 staff were being made redundant in its radio and sales teams.
"Covid-19 has simultaneously changed the world and impacted our business in ways that we could not predict or prepare for," chief executive Michael Anderson said in an email to staff at the time.
"It has also completely changed the market that we operate in and this means that we must adapt to ensure our survival and sustainability in the coming months.
New GM of TV
While MediaWorks and Discovery work towards completion of the transaction, Glen Kyne
has been appointed General Manager of TV, a role that will continue under Discovery post
Discovery's Australia and New Zealand operations will move under Simon Robinson, President APAC.
Meanwhile, Gareth Codd has been appointed acting commercial director for MediaWorks
Group in the interim. Rebecca Kent, GM of Discovery Australia, New Zealand and Pacific
Islands, will continue to oversee the New Zealand pay-TV portfolio and free-to-air
channels Choice and HGTV, and the Australia operations.