Mediaworks returns to profit as radio boosts income

Mediaworks Investments, the free-to-air broadcaster, has returned to profitability in its first 10 months under a new capital structure, with its radio business being the biggest contributor to earnings.

Profit was $12 million in the 10 months and 22 days ended Sept. 30, according to the Auckland-based company's financial statements lodged with the Companies Office. Sales were $246.9 million while costs were $221.8 million over the trading period. The broadcaster's previous holding company, GR Media Holdings, last reported a net loss of $90 million for the year ended Aug. 31, 2012, before being tipped into receivership in June 2013.

Mediaworks Investment's earnings before interest, tax, depreciation and amortisation was roughly $50 million in the abbreviated period, a Mediaworks spokeswoman said in an emailed statement. That was more than the annual adjusted Ebitda of $28.8 million GR Media Holdings reported in 2012.

"MWL's Radio business was the strongest contributor, the performance of the Television business was healthy, and Digital grew well through the year," she said.

Post balance date Mediaworks spent $7.4 million buying new radio broadcast licenses to expand its national coverage. The company also announced plans to merge its television, radio and digital newsrooms as part of a reorganisation across the business.

This is the first financial report for Mediaworks since the group's lenders completed their recapitalisation of the company in November 2013. That reduced the company's debt levels to about $100 million from more than $700 million beforehand. The transaction put a value of $285 million on Mediaworks, according to the Overseas Investment Office's August approval of the deal.

The restructure also installed a new board, chaired by Australian businessman Rod McGeoch. Former Eyeworks Touchdown boss Julie Christie, best known in New Zealand for a string of reality TV series, ex-PBL director Martin Dalgleish and former Lion Nathan chief financial officer and McKinsey - Co consultant Paul Lockey joined him on the Mediaworks' board.

Last August it appointed Mark Weldon, former NZX boss, as chief executive, fuelling speculation the business is being readied for an initial public offering. The 2014 financial statements show the board and senior management have been issued shares as part of an incentive compensation scheme, which will be triggered on an "exit event".

At balance date the company had $353.9 million in assets, with $31 million in cash, while liabilities were $147.2 million.