Three short words fill me with a sense of dread when they are linked to the media industry – private…equity…company. Collectively they represent a form of enterprise that never peers over the top of a sterile balance sheet.
Their sole purpose is to provide the best possible return for their investors. There is nothing inherently wrong it that goal, but the single-minded pursuit of profit makes them manifestly unsuited for ownership of companies providing social, cultural and democratic services to the public.
Media companies that produce or carry news and information services have impacts on society that were once recognised as imposing inherent obligations on the organisation.
In the past, owners accepted forms of cross-subsidisation without question. They funded journalism that was important, but which may not have attracted audiences as readily as the salacious or merely entertaining. They sent journalists far afield following politicians, when reporting a rugby tour was arguably more popular. They did so because one of those inherent obligations was holding power to account.
Some owners continue to shoulder those obligations and long may they continue to do so. However, for every organisation that continues to meet social and civic needs, there is another that has been decimated in the name of ‘return on investment’.
The latest manifestation of private equity bitemporal hemianopsia (I chose this form of tunnel vision because it doesn’t just affect the periphery but half of what we see) is what has happened to MediaWorks at the hands of Sydney-based private equity firm Quadrant and the New Zealand media company’s previous owners.
Quadrant acquired 100 per cent ownership of MediaWorks last April. About five years earlier it had bought Australasian outdoor and transit advertising company QMS Media, which owned 40 per cent of MediaWorks. QMS had masterminded MediaWorks’ profitable outdoor advertising operations in New Zealand.
Last September Quadrant split MediaWorks’ operations, with outdoor advertising reporting directly to QMS in Sydney. Its radio operations remained under local New Zealand control. In other words, the revenue stream from outdoor advertising – 16 per cent of QMS’s overall revenue – no longer figured in MediaWorks finances. It relied now on radio advertising, and that market was depressed.
Last month, The New Zealand Herald’s Media Insider Shayne Currie reported that Quadrant had sold QMS to Australia’s Nine Entertainment for $A850 million. The Australian reported Quadrant made a $A279 million profit on the deal. That, in a nutshell, was why Quadrant had bought QMS and then MediaWorks.
Now, Currie reports, the 12 MediaWorks radio stations are about to go on the block. It has the feel of the private equity company wanting to get rid of what is left.
MediaWorks, and its previous flagship TV3, have been at the mercy of foreign interests and fund managers since Canwest saw an opportunity when the Third Channel went into receivership not long after its launch. The Canadian broadcaster gradually increased its holding to 100 per cent then sold its New Zealand interests to US-based private equity company Ironbridge in 2007. Loaded with debt, MediaWorks was again placed in receivership and yet another private equity company Oaktree saw an opportunity. It split off TV3 and put it up for sale.
When it was sold to Discovery – a prominent streaming channel operator – there were hopes that TV3 was back in the hands of owners who knew the business. That sense was enhanced by Discovery’s merger with Warner Bros in 2022.
Any sense of well-being would prove short-lived. Two years later Warner Bros Discovery shut down TV3’s news operation (Newshub), cancelled its morning news and current affairs programmes, and outsourced the 6pm bulletin to Stuff. Last year it sold Three to Sky TV for a dollar.
MediaWorks closed its own news operations and took up a service from RNZ. The remaining components of its radio networks have maintained their own brand identities
Now, however, the remnants of an enterprise that has been a vital component of the pluralistic health of our media system, are apparently to be sold.
It is unlikely the radio division will simply be sold to a new owner who will continue to run it as a stand-alone business, and ensure that New Zealanders continue to have the choices they have enjoyed. It is far more likely that the stations – some or all – will be folded into existing operations and suffer the consequences of economising shared resources.
MediaWorks’ largest commercial radio competitor, NZME, would doubtless like to get its hands on some of its rival’s music stations but would fight an uphill battle with the Commerce Commission to gain approval. Stuff and Sky TV have both been mentioned as potential buyers.
Stuff already has several commercial cooperative arrangements with MediaWorks, but to take on broadcasting at a time when the entire sector is under pressure would be a risk – unless it is able to introduce significant economies. Among them would be content sharing and Stuff has already shown its skills in that environment.
It shares content including full pages between its newspapers and the TV3 6pm bulletin relies on Stuff’s own newsgathering. However, the MediaWorks networks are no longer news-driven. In 2023 Today FM was abruptly taken off air – to the consternation of the staff who were on air – and replaced with a music station. Are there sufficient synergies between Stuff and MediaWorks to make it work?
And Sky TV has different problems on its hands with other players – including Warner Bros Discovery – pushing for shares of its streaming market. It also has the challenge of running TV3, at least until streaming ultimately replaces broadcast television.
Another buyer may come out of the woodwork. Should that be another private equity fund manager, my sense of dread will be all the stronger. Pray it is not so.
Disclosure: AI image generated by ChatGPT.
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