APN sits tight on NZME sales, as it waits to see benefit of restructure

APN News and Media, the Australian publisher of The New Zealand Herald newspaper, has put off the public share float for its newly consolidated kiwi business, NZME, as it announced an annual profit fall of 11 percent for its New Zealand operations..

Last year, the Sydney-based company bundled its New Zealand business, which include The New Zealand Herald, The Radio Network and GrabOne, under the NZME banner to cut costs and package the assets for an initial public offering. Plans for APN to divest from the carved-out media company, most likely via a listing on the NZX, have now been pushed out for "at least 12 months", as it assesses the benefits of integration, APN said in its annual financial statement.

APN chief executive Michael Miller told BusinessDesk the delay wasn't due to a lack of investor interest, but rather waiting for the benefits of consolidation to get the best price.

"This has been a board discussion rather than an investor discussion on how do we maximise the price for any divestment," Miller said. "We do see improving trends in New Zealand due to some of the changes we've started to make. It's still early days and part of our delaying the divestment for at least 12 months was to give the business all of 2015 to continue to make the changes around integration."

NZME earnings before interest, tax, depreciation, and amortisation declined 11 percent in the year ended Dec. 31 to $81.6 million, ahead of the $74.6 million it forecast in November, while sales fell 6 percent to $445.8 million, the company said in a statement. Across the NZME divisions, the publishing segment's earnings before interest, tax, depreciation and amortisation fell 17 percent to $52.1 million. NZME Radio earnings increased 7 percent to $25.1 million, while NZME eCommerce earnings fell 22 percent to $4.4 million.

The traditional media industry is under pressure, as businesses are yet to figure out how to make money from online news, while audiences and advertisers are increasingly difficult to capture. APN has been restructuring its business, buying the remaining 50 percent of the Australian Radio Network and The Radio Network in New Zealand it didn't already own, and writing down the value of its traditional newspaper assets, including booking $54 million impairment on the value of its New Zealand newspapers in 2014.

NZME plans to introduce a pay wall for its online content later this year, which Miller said would follow a metered system, with a number of free articles before the reader must register and pay to see further content. Although some pay walls are easily skirted, using private browsing tools, Miller said any NZME pay wall wouldn't be "leaky" and revenue benefits would take two to three years to be seen.

Overall, the Australasian group's net profit was A$11.5 million in the year ended Dec. 31, up from A$2.6 million a year earlier. Revenue from continuing operations increased 3 percent to $843.2 million. The media company didn't declare a dividend, as it looks to reduce debt and strengthen its balance sheet.

Across the Tasman, its Australian radio segment boosted Ebitda 14 percent to A$66.5 million as it increased its market share, particularly in metropolitan radio. APN's Australian regional media business Ebitda declined 15 percent to A$25 million while the outdoor advertising segment, lifted Ebitda 15 percent to A$14.3 million.