MediaWorks has slumped to a $25.14 million loss and says material uncertainties impacting earnings may cast "significant doubt" on the group's ability to continue as a going concern.
Financial statements for the year to December 2019 report the company's total liabilities more than doubled during the year to $296.34m ($138m in 2018) with borrowings of $133.1m at balance date.
MediaWorks, which owns television and radio assets, including TV station Three and radio brands The Edge and The Rock, says since year end, negotiations are underway with parties who have expressed an interest in buying the business.
"At this early stage, the range of options to either sell or retain the business are not yet fully known. The board will continue to review alternatives as they arise."
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A MediaWorks spokesperson said "our FY19 results are outdated since Covid-19 has completely changed both our business and the market that we operate in."
The loss was largely attributable to an impairment of $21m, including a $12.13m write down on property, plant and equipment assets.
"This impairment was a precautionary write down of our TV assets in preparation for sale. This was a fiscally prudent approach in a time of market uncertainty. The impairment was a one-off and we would expect it to look very different based on the sale of TV," the MediaWorks spokesperson said.
"In reflection of our 2019 financial year, there are some pleasing parts as we saw EBITDA grow for the third consecutive year, revenue was up and television remained stable in a very challenging environment."
Notes to the accounts said the group was closely managing its cash flow requirements and was working with its lenders on a number of areas.
"With the continued support of its lenders the group forecasts that it will be able to meet its financial obligations falling due within the next 12 months," the accounts say.
"However, it is forecast that financial covenants [for banking facilities] will be breached for measurement dates from June 30 2020 onwards due to declining ebitda earnings."
The group is in the process of negotiating revised lending terms, including covenants with the lenders.
"The directors recognise material uncertainties exist over the group's ability to renegotiate its lending terms with the lenders and to meet the terms of any revised agreements ongoing.
"These uncertainties may cast significant doubt on the group's ability to continue as a going concern. If the group is unable to continue as a going concern it may be unable to realise the value of its assets and discharge its liabilities in the normal course of business."
MediaWorks had obtained $8.6m of wage subsidies and had asked all existing employees to take a voluntary 15 per cent pay cut.
Overall revenue for the business came in at $341.2m, up from $305m on the previous year. Advertising revenue was $332.67 up from $293.85m.
As at December 31, the group had net assets of $273 m (213.1m in 2018), working capital of $14.3m and cash balances of $37.9m.
MediaWorks last month 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.
"... we must begin reducing the size of our business and we are now entering a restructuring process across our sales, out-of-home and radio divisions.
"MediaWorks needs to be a different shaped business to operate in a different world."
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.
Voluntary pay cuts have been extended through to the end of September to help cover the revenue shortfall.
As well as the government wage subsidy, the company also benefited from a 'partial' suspension of television transmission fees.
The package was designed to help the media industry bridge a short-term collapse of advertising revenue as the nation went into level 4 lockdown.
Late last month, rival media company Stuff was sold to management for $1.
Nine Entertainment announced the sale on the ASX. The new company will be led by Stuff's chief executive, former journalist Sinead Boucher.
The deal ends years of speculation about the company's ownership, after lengthy attempts by NZME, owner of the New Zealand Herald, to buy the company were unsuccessful.