12:23 PM |
Title – 6845 NZ: MediaWorks owner reveals NZ$314m loss
Date – 6 May 2010
Byline – John Drinnan
Origin – Pacific Media Watch
Source – New Zealand Herald Online, 5/5/10
Copyright – NZH
Status – Unabridged
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MEDIAWORKS OWNER REVEALS $314m LOSS
www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10642793
By John Drinnan
AUCKLAND (New Zealand Herald Online/Pacific Media Watch): Private equity company Ironbridge has finally revealed the parlous state of New Zealand's TV3 operator MediaWorks, releasing accounts that show a mammoth $314 million loss for the year to August 31, 2009.
After being loaded with debts when bankers bought it in 2007, the media firm that owns TV3, C4 and several radio stations has had to shell out more than $91 million a year in interest.
Financial statements to the Companies Office show MediaWorks' holding company - HT Media Holdings - weighed down with the debt from Ironbridge's leveraged buyout in 2007.
The big bottom line loss includes a write-off of $258 million in goodwill - representing more than 30 percent of the 2007 purchase price.
The $314 million loss compares to a $40 million loss for the previous year.
Financial details are historical with Ironbridge restructuring debt in December last year and changing the holding company to another company, GR Media.
Ironbridge says cash interest payments under the new structure are now lower.
Under its complex structure it is hard to know who owns how much of this high-profile media company.
Some investors owed money by HT Media swapped debt for equity and Goldman Sachs reportedly holds a 13 percent stake.
Ironbridge insists that it - and the banks associated with it - still own more than half of the firm.
But even if the interest payment blow-out is historical, the statement to the Companies Office is sobering reading, highlighting the pressures facing the media firm.
It is a reminder of the impact from heavily leveraged deals at the height of the private equity boom in 2006 and 2007.
HT Media's earnings before interest, tax, depreciation and amortisation were $56.2 million, down from $66.6 million in 2008 so it was trading successfully in a depressed market.
An 11 percent, or $31.8 million, fall in revenue during the unprecedented slump harmed attempts to boost its net profit.
Even without the fall in advertising revenue the firm would still have been hard pressed to make a profit while meeting interest demands.
Ironbridge spokesman Kerry McIntosh claimed a substantial drop in the interest payments now the media assets were constituted under GR Media.
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