APN, Fairfax in talks to merge NZ media businesses

Wednesday 11 May 2016 10:11 AM

APN, Fairfax in talks to merge NZ media businesses; APN outlines plan to de-merge NZME

By Jonathan Underhill

May 11 (BusinessDesk) - APN News & Media and Fairfax Media are in talks about a potential merger of their New Zealand media assets this year, and APN has separately outlined plans to demerge its NZME unit.

"If completed, the combined company will be a leading New Zealand media business, offering depth of news, sport and entertainment coverage across a diverse mix of channels including print, digital and radio," APN said in a statement to the ASX. Any transaction would require signoff from the Commerce Commission and other regulatory consents, agreement of the two boards and the companies' shareholders.

APN said market conditions in New Zealand have been challenging and revenues fell 10 percent in the first quarter, which underlined the importance of the restructuring of its local operations into NZME to cut costs. The company has proposed demerging NZME by issuing shares in the business to existing shareholders with a primary listing on the NZX. That would allow APN "to focus on its Australian growth media assets of radio and outdoor".

The shares would be issued on the basis of one NZME share for each APN share held, it said. APN would also undertake a one-for-seven share consolidation. Shareholders will vote on the plans at a meeting on June 16. The media company also plans to raise about $180 million via a fully underwritten one-for-three renounceable entitlement offer.

APN abandoned plans for an initial public offering of its NZME division in February and its shares had been halted for today's announcement.

NZME's assets include the flagship New Zealand Herald newspaper and Newstalk ZB, the country's No. 1 radio station. Sales fell 3 percent to $433 million in 2015, which it said reflected a tough advertising market and soft New Zealand economy. Earnings before interest, tax, depreciation and amortisation fell 8 percent to about $75 million.

Of NZME's 2015 revenue, 68 percent came from publishing and 28 percent from its radio assets. The GrabOne daily deals website generated about 4 percent of sales.

NZME also merged its three business into one, with a common newsroom and combined commercial teams and shifted its headquarters, achieving cost savings of A$20 million. The business was reorganised into content 'verticals' - news, sport and entertainment.

(BusinessDesk)

ends

© Scoop Media