MediaWorks moves closer to profitability in FY 2018 results

MediaWork’s FY 2018 results are out and with a net loss after tax of $5.5 million, the company is showing signs of moving towards profitability.

In FY 2017 MediaWorks reported a net loss after tax of $5.7 million, and further back in FY 2016 its net loss after tax was $14.8 million.

“It’s pretty gratifying that in two years that have been challenging we have been able to grow,” chief executive Michael Anderson says.

This time last year, Anderson told us MediaWorks “just needed to keep motoring along” and today he says it’s delivered on that.

MediaWork’s biggest growth came from its digital platforms that reached a revenue of 14.5 million — up from $11.6 million in FY 2017.

According to MediaWorks, its digital platforms reach a unique audience of one million Kiwis per month.

Those digital platforms include its online radio platform Rova, that’s continuing to grow with 385,000 downloads and 93,000 unique monthly users.

And for those looking for something to watch online, ThreeNow’s on-demand streams increased by 18 percent in 2018 versus 2017. Live streams were up 52 percent accounting for 16 percent of all ThreeNow streams.

Also growing in revenue for MediaWorks was TV, with TV revenue up to $133.7 million, after reaching $129.3 million in FY 2017.

Anderson says it’s a pleasing result considering TV was the most challenged platform a few years ago.

This year, Three is celebrating its third birthday as ‘Three’, since rebranding from TV3 and according to MediaWorks, as of this week it was the number one channel for 25-54s in New Zealand in the all-important peak period for 2019 (year-to-date), averaging a 21.5 percent share this year.

Looking at the channel’s performance last year, it was home to the number one show in the country (25-54) as 620,000 New Zealand tuned into their TVs to watch Stan. The documentary saw an additional 150,000 streams on ThreeNow.

And in the series space, The Block NZ was Three’s highest rating series in 2018, with a rating average of 9.9 and 29.8 percent audience share in 25-54. It also saw success online, generating 1.6 million streams which was a 25 percent increase on 2017.

Married at First Sight Australia was also a success, averaging an 8.7 rating and 28.2 percent audience share. But, local remains a focus for the channel and in 2018, Three aired more than 2,722 hours of local content.

While digital and TV were on the up, last year saw radio’s revenue fall. It reached $153.8 million after achieving $159.3 million in 2017.

In the first GfK Radio survey of the year, MediaWorks Combo had a weekly audience of 2,378,500 New Zealanders (10+) up 19,500. That includes The Edge listeners which keep the station in the number one spot for commercial stations, with a weekly audience of 608,500 New Zealanders.

This year also saw the debut of Magic Talk and Magic Music (after the Magic brand expanded to incorporate RadioLive). The GfK survey showed the network had the number three spot for station share at 8.1 percent and MediaWorks’ radio group content director, Leon Wratt, said at the time he was “thrilled” with its debut.

Looking at the drop in radio revenue, Anderson says it was “unexpected” and is not a reflection on its performance, rather a drop in the third quarter of 2018 that saw radio revenue across the market drop off.

Given the channel’s performance this year, he says the drop looks to be “just a one-off”.

Beyond its platforms, the financial results also show MediaWorks has managed to reduce its costs over the last three years. In FY 2018 it spent $280.1 million compared to the $284.5 million in FY 2016. Over the three years, the biggest saving has been seen in ‘programming and production’ which has fallen from $104.1 million in FY 2016 to $99.4 million in FY 2018.

It was just last week news broke that changes to Newshub were afoot, with staff reported to have been emailed about a restructure and called into individual meetings.

Asked about the restructuring, Anderson says Newshub’s had a pleasing year and MediaWorks, like all organisations, needs to look at ways of improving its performance.

“We will continue to do that across every aspect of our business and if we don’t do that we will suffer as a consequence.

“The Newshub restructure is a part of that. It’s about doing it while we are on the front foot – changing from a position of strength and growth and looking at a way we can do things better.”

Anderson calls it a performance initiative, not a cost initiative, adding it will see a few roles change.

One move expected to make a significant change to MediaWorks’ performance is the acquisition of QMS.

The proposed merger was announced at the end of 2018 and the two companies have since been in the process of getting it all together.

Anderson expects it to be sometime in the next month or two that we see a conclusion and the deal ratified. On completion, the merger will establish the newly combined QMS and MediaWorks as a multi-media advertising group.

Anderson will continue as CEO of the combined group.

When the merger was announced last year, Anderson said: “I am looking forward to bringing the businesses together, with our continued focus on local content and local client solutions. This partnership will really demonstrate the strength of a true multi-platform, local media company.”

However, MediaWorks won’t have the ability to leverage the combination of TV, radio, digital and out-of-home until 2020, as Anderson says the rest of this year will be about bringing the two companies together.

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