Radio and outdoor advertising business MediaWorks has revealed a massive $110 million impairment following a net loss of almost $10m for its most recent financial year.
The company’s financial statements for 2022 have been finally released today – and provide one of the starkest illustrations yet of the challenges facingNew Zealand’s media industry.
The company is putting a brave face on the numbers, citing a number of operational improvements and green shoots – it says 2023 has also been challenging but there are “encouraging signs of business confidence returning”.
MediaWorks operates a suite of popular music radio stations including The Breeze, More FM, The Edge, The Rock and Mai as well as a big outdoor advertising arm.
It closed Today FM suddenly in late March, citing the need for cost cuts in a tough market. Dozens of staff, including hosts such as Tova O’Brien, Lloyd Burr and Rachel Smalley, lost their jobs. The company revealed today it has removed about $10m annually in costs.
For its full financial year 2022, MediaWorks reported total revenue of $214.9m – a 5.9 per cent increase on the previous year – and ebitda of $34.4m.
However, operating costs were up 9.1 per cent in 2022, “largely due to the impact of 7.2 per cent inflation in New Zealand as well as increased investment in our people and technology”.
The net loss after tax and other items for the year was $9.7m.
The one-off impairment of $110.1m reflected the write-down of goodwill and “alignment of asset value to current global trends”, the company said in a statement on Friday morning.
MediaWorks chief financial officer Mike Asbridge.
MediaWorks chief financial officer Mike Asbridge said: “There’s no doubt 2022 was a tough year for the media industry but I’m proud of what MediaWorks achieved. Notably, we were able to grow our revenue and continue to invest in our digital platforms and content.”
He told Media Insider the impairment was roughly split equally between the radio and outdoor arms of the business.
“There’s a fair amount of detail in the results of the calculation but, essentially, it’s what we do every year – we do an impairment test and it’s a reflection of the wider global media industry more than anything else.
“We look at similar companies and how their overall value has moved, and we reflect those movements and numbers and then adjust accordingly.”
Despite the impairment and financial challenges, MediaWorks chief executive Wendy Palmer said there were no plans to sell any assets or split the company.
“We think we are stronger together in terms of the current structure,” Palmer said.
“The breadth of our portfolio is really great – it’s great for our clients and great for our teams internally. There’s nothing on the radar in terms of any change.”
Palmer is now in the chief executive role permanently, following an initial stint as interim boss.
With that change, she said she had felt the dynamic shift for her and she was feeling positive for the company’s future. “Absolutely … that’s why I’ve stayed on.”
“We are seeing green shoots with revenue in Q4. It’s feeling good. We are happy with the way the future’s looking and where we’re positioned.”
While NZME’s Newstalk ZB is the number one commercial radio station in New Zealand by a big margin, MediaWorks stations dominate the music audience market.
MediaWorks will be looking to maintain that position, while wanting and needing to build a stronger digital strategy.
Debt position to be revealed
The company’s full financial results are expected to be posted with the Companies Office today, revealing its debt position.
It has been refinancing for long-term debt.
The numbers are likely to reveal a high debt-to-ebitda ratio.
“That’s something more driven by our owners,” says Asbridge, when asked if he was happy with the ratio.
“For us, the focus is on the ebitda itself; the capital structure of the businesses is in their [owners’] court, and that’s something they’re comfortable with at the moment.”
Asbridge said it was too early to say how 2023 would end up, financially.
“The first half of 2023 remained challenging, but there are encouraging signs of business confidence returning.
“The strategic decisions we’ve taken to streamline and focus on our core strengths have enabled us to reduce operational costs by over $10m annually.”
MediaWorks has been late to file its results and was on a collision course with MBIE.
“There’s been a number of changes over the last few months that have slowed things around the documentation of the refinance. So, nothing more than that, really,” Asbridge told the Herald.
Board director Barclay Nettlefold said with Palmer confirmed in the CEO role and driving a “back to basics” strategy, there was a clear pathway for the business.
“With a powerhouse combination of audio, digital and outdoor media, MediaWorks is in pole position to capitalise on a rebound in marketing spend as business confidence builds in the second half of 2023 and beyond.”
The company reported today that there had been a 34 per cent increase in digital revenue in 2022, compared with 2021, “driven by investment in digital content and the rova app”.
“We’re really thrilled with the growth of our rova app and our digital content,” said Palmer. “It’s been fantastic to see Duncan Garner’s Editor in Chief [podcast] go from launch to being in the top three news podcasts in New Zealand within about three months.”
MediaWorks podcast host Duncan Garner. Photo / Jason Oxenham
There had been a 9 per cent increase in gross advertising revenue for outdoor. It had expanded inventory during the year with 20 new large-format digital screens across the country.
This week, MediaWorks announced the departure of its commercial director Liz Fraser, who is joining corporate travel and expense solutions business Serko Ltd as chief revenue officer.
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
