MediaWorks narrows loss to $90 mln in 2012 as finance costs rise, impairments weigh
By Paul McBeth
June 24 (BusinessDesk) - MediaWorks NZ, the broadcaster whose lenders look likely to seize control, narrowed its annual
loss in 2012 after massive writedowns a year earlier.
The group’s holding company, GR Media Holdings, reported a net loss of almost $90 million in the 12 months ended Aug.
31, 2012, from $318.4 million a year earlier, according to financial statements lodged with the Companies Office. The
year-earlier result included $241.6 million to write down the value of MediaWorks’ goodwill, primarily in the TVWorks
business.
The Auckland-based broadcaster’s cash-paid finance costs were slightly lower at $28.7 million, though its capitalised
finance costs jumped by more than 50 percent to $46.7 million. It booked a $28.8 million impairment charge, writing down
the value of TV programme rights that were still to be aired after Sept. 1. It also accelerated its writedown of
analogue assets by $3 million ahead of the digital switchover.
Stripping out non-cash costs, earnings before interest, tax, depreciation and amortisation sank 35 percent to $28.8
million, barely more than the company’s borrowing costs. Revenue crept up 0.5 percent to $259.6 million, while costs of
programming and production climbed 9.5 percent to $128.4 million and sales and marketing spending rose 12 percent to
$61.1 million. Net operating cash flow was $261,000 in the year.
The company said MediaWorks Radio performed strongly, with revenue growth of 1.4 percent, and EBITDA beating budget.
Auditor PwC gave a disclaimer of opinion on the accounts, which were prepared on a non-going concern basis due to the
uncertainty as to whether the broadcaster’s lenders would extend their support for the business.
Last week, MediaWorks’ lenders appointed Brendon Gibson and Michael Stiassny of KordaMentha as receivers to oversee a
restructuring plan where the broadcaster’s assets will be placed in a new entity owned by the debt holders.
While the transaction isn’t a done deal, with the receivers obliged to entertain all bids to get the best price, it
effectively ends Ironbridge’s involvement in the business since its debt-funded purchase of CanWest’s 70 percent stake
in 2007 valuing the broadcaster at some $741 million.
As part of the restructure prominent Australian businessman Rod McGeoch will chair the company taking over MediaWorks,
and former Eyeworks Touchdown boss Julie Christie, best known in New Zealand for a string of reality TV series, will
join him on the board.
The deal will see a new capital structure reducing the broadcaster’s debt to less than $100 million.
GR Media’s financial statements show total borrowings of $496.7 million, including about $25 million of accrued
interest, and subordinated and payment in kind shareholder loans of a further $176.8 million, of which $55.7 million was
accrued interest.
The insolvency event also means MediaWorks’ $172.7 million in programme rights commitments over the coming five years
are open to termination.
Last year, the broadcaster said it planned to spend more on local television programmes as it winds down its deal with
CBS Broadcasting and stops taking new shows from the most-watched network in the US.
(BusinessDesk)