Statement On A Misleading NZ Herald Article Re MediaWorks

Published: Thu 10 Mar 2011 09:08 AM
Statement and Letter Addressing A Misleading NZ Herald article Regarding MediaWorks
Dear Sir,
Ironbridge Capital would like to correct several aspects of your misleading front page story about MediaWorks headed “Your $43m lifeline to TV3 owner”.
1. Deferred spectrum payment
The facts are as follows: In mid 2009, the radio industry negotiated a lease renewal for the spectrum used for broadcasting radio signals in NZ. Unlike the previous 20 year lease, the Government initially requested full payment upon the lease commencement in October 2010. With the sharp downturn in business in 2009 and 2010, it became clear to all members of the industry that meeting the payment date of October 2010 was going to be difficult, and so the Radio Broadcasters Association commenced negotiations with the Government to create a deferred payment plan. The outcome was agreement for a 5 year payment schedule with the deferred component accruing interest at 11.2%. This was offered to all radio broadcasters and several, including MediaWorks, took up the option. For the record, TRN a major player in the radio industry and a member of the APN, Group (owner of the Herald) was extended exactly the same offer from the Government.
We note that the deferred payment scheme was publicly announced in October 2009.
2. Debt
MediaWorks’ balance sheet was successfully restructured 14 months ago and as a result, the Company’s senior bank debt was reduced to $387 million. In addition, there are shareholder funds that are structured as a mix of shareholder loans and equity. But the relevant debt number is $387 million and your journalist should have noted that the cash interest charge reduced from $49 million to $30 million from FY09 to FY10 as a result of the successful refinancing.
3. Operating profit
MediaWorks generated Earnings Before Interest and Tax and Depreciation (EBITDA) of $50.l million in FY10. That represented an increase of 11%. We consider this to be a credible result in a tough market and compares favourably with our peers.
4. Net Loss
You state that financing costs turned the operating profit into a $55m loss. This is incorrect. As clearly shown in our Companies Office accounts the below the line costs included material non-cash items unrelated to financing including the write-down of old analog legacy transmission assets and various one-off charges associated with the restructuring of the Company. These items do not affect the trading of MediaWorks in any way.
5. Use of Newsreaders and Announcers Images
We regard the misleading nature of this article as little more than a cheap shot at a competitor. Moreover, the use of photographs of newsreaders and announcers who have nothing to do with this story was simply gratuitous. Please note that Hilary Barry is a current not former host of Radio Live.
In summary, the financial position of the Company is good, earnings have improved and debt has been reduced. All of MediaWork’s shareholders and financial partners, including Ironbridge, as its major shareholder, remain fully supportive of the company and its management and staff, who continue to deliver great results in a difficult trading environment.
Yours sincerely,
Kerry McIntosh
NZ Operating Partner
Mike Hill

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