Earlier today, MediaWorks sent out a release confirming that it had bought out Rachel Glucina’s share of Scout for an undisclosed sum and that she would be leaving the organisation. And the symbolism of this move should not be underestimated.
Scout came to represent much of what was wrong with the Mark Weldon era. The company’s collaboration with Glucina soon after the canning of Campbell Live—and soon after her involvement in the prime minister’s ponytail scandal story—was widely criticised, with some of the loudest voices coming from within the organisation.
The release says that MediaWorks has proposed folding its entertainment news in Newshub, which will likely result in the closure of Scout.
Canning a website that it had invested in heavily, but had failed to take off as promised, sends out a message that the organisation is looking to start afresh.
Glucina was one of the few people in the industry to have said something positive about Weldon following his departure, and much of the staff at MediaWorks saw her as something of a Weldon loyalist.
— Rachel Glucina (@RachelGlucinaNZ) May 3, 2016
While many of the recent MediaWorks staff moves have been a hit to staff morale, there aren’t many at the company who will mourn the departure of Glucina. If anything, the closure of Scout feels like a case of MediaWorks management apologising for getting it wrong over the last year.
But the announcement of Glucina leaving the company is just one of a few interesting moves MediaWorks has made this week in an effort to move on.
On Wednesday, the organisation invited journalists from a range of publications to interview acting chief executive David Chalmers about the company’s financial results.
MediaWorks was under no obligation to open its doors to the media. And it would’ve been understandable had the company chosen not to speak to the media, given the results.
The financial figures Chalmers shared with StopPress were difficult to compare, given that period FY14 ran over 10.8 months, while the figures for FY 15 ran over 15-month period.
The figures for the 15-month period show that MediaWorks earned a total revenue of $347.9 million against expenses of $314.4 million, resulting in a trading profit of $33.5 million.
Despite FY14 being recorded over a much shorter period, it had a higher profit at $41.8 million.
This is, of course, not comparing like to like, and Chalmers says it’s difficult to normalise the figures.
“You could gross up the 10.8 months or gross down the 15 months, [but] FY15 has two fourth quarters, and that’s typically a very big period in TV,” he says in explaining this point.
“So what that means at an EBITDA level, if you were to perform that mathematical exercise, you get a decline of around 42 percent, but it’s actually more like 50 percent, in a calendar year to calendar year.”
Chalmers admits FY15 had been “a tough year” and that the drop in profit was attributable to the company’s investments and restructuring.
Chalmers said the company had invested heavily on expensive to produce local content and that in some instances this didn’t result in the expected returns.
“We increased the amount of local content in 15, which was tough to do in a declining ad market. What we found was that the returns on that didn’t meet what we had for the investment cases.”
Chalmers pointed to the shows Masterchef NZ and X Factor NZ as examples of programming that did not live up to expectations.
Chalmers pointed to soft market conditions in the television, with overall ad revenue across all broadcasters dropping by $10.6 million dollars (around 1.7 percent).
In contrast to this, he said The Bachelor NZ performed well, The Block NZ is up on last year and the company’s radio brands had performed very well.
“There’s so much focus on TV, but radio is really the biggest part of our business. It was in 2014, it is in 2015 and it will be in 2016. And that’s both from a revenue and profit point of view.”
The lowest contributing category to overall revenue was digital, which only added $13 million over the 15-month FY15 period (when asked about the numbers provided by Fairfax and NZME for the Commerce Commission, he questioned the accuracy of the figures and said “they weren’t on the same page”. He wouldn’t go into any more detail but those numbers are all calculated through media agency spend, and radio in particular has a lot of direct spend).
“Digital is not in harvest mode,” Chalmers says. “We’re at a point in time when we’re investing into that platform. We see audience will inevitably dip in and out of that platform. Digital is a longer game for us. The critical thing is that unless you’ve invested in the platforms to deliver that you can’t get there.”
Overall, Chalmers says the business was in a far more stable position than it had been in recent years. During FY15, MediaWorks reduced its senior debt by $17.1 million from the previous financial year.
“Our current senior debt sits at $72.9 million. Now, in the old days, we had several hundred million dollars.”
Chalmers says the decision by vulture fund Oak Tree capital to complete a 100 percent acquisition of the company in May 2015 had brought stability to the company.
Chalmers says Oaktree invested around $20 million in the business in FY15 and that the amount this year is set to be around $20-25 million.
“We think about building the business for the medium to long term. We don’t want to wring the neck of the business.”
A source has, however, suggested that was exactly what Weldon was brought in to do.
The source says the former chief executive’s main prerogative was to prepare the business for sale by spending up large on big productions to boost sales and then “flog it on for a higher multiple”.
The source says the strategy did not work, largely because of the general malaise of media but also because the integration strategy did not generate the level of revenue expected, particularly on the digital side.
Breaking down the walls
Regardless of Oaktree’s intentions with the company, there does seem to be a shift taking place at MediaWorks following the departure of Weldon.
The frankness with which Chalmers spoke on the financial performance of the company to media—particularly to the Herald, which has revelled in sticking the boot into its competitor (one source suggested to StopPress that a reason Nielsen changed its policy regarding requests for ratings was due to constant requests for very specific pieces of information that were being used to point out poor performance)—indicates that the company is looking to break down some of the walls that Weldon had put up.
Another source told StopPress that the company is now looking to engage with the media, rather than waiting for stories to leak.
This approach certainly does have its benefits, as shown earlier this month in adland when Barnes, Catmur & Friends Dentsu front-footed the news that it had lost the Independent Liquor account.
Rather than waiting for the rumour mill to kick in, the agency’s managing partner Paul Catmur contacted StopPress informing us of the account move.
Things always get messier when a vacuum is left to be filled. And no matter how high you build the walls around your garden, the dirt will always leak out.
In a piece published earlier this week Guardian writer Aditya Chakrabortty referenced Francis Spufford’s novel Red Plan, using it to show how those within a regime are often the first to criticise it.
“… long before any public protests, the insiders led the way in murmuring their disquiet. Whisper by whisper, memo by memo, the regime is steadily undermined from within.”
Despite Weldon’s efforts to keep the company’s affairs private, those within MediaWorks started voicing their frustration—and, often, leaving. This seemed most obvious in the in-depth feature on Scout in The Spinoff, which included a huge amount of insider information.
MediaWorks was always well-liked and its brand attracted some of the best people in the industry. Some media folk we’ve talked to have told us that while their products may not have been as good as their competitor’s, those people kept the money flowing in. That spell appears to have been broken by Weldon (who, we were told, admitted that he often hired the wrong people, but often wasn’t able to give that responsibility to those who had a proven track record). And while there is always a continuum of truth in business, this more transparent approach seems to be an attempt from the embattled media company to replenish some of the reputation it has lost over the last year.