18 Oct 2019

MediaWorks TV on the block - what next?

From Mediawatch, 5:00 pm on 18 October 2019

Broadcasting company MediaWorks intends to sell off its television operations, putting TV channels Three, ThreeLife, the joint-venture Bravo and news service Newshub in limbo - along with hundreds of jobs. Mediawatch looks at the move and asks a former insider what might happen next - and when. 

Mediaworks' hit show The Block

Mediaworks' hit show The Block Photo: screenshot / 3Now

MediaWorks has had plenty of corporate upheavals over the years. It tipped itself into receivership in 2015 to ditch an expensive overseas content deal and install a new regime which injected a rich diet of reality TV shows into primetime. 

One of those was The Block, in which contestants competed to sell on Auckland properties for profit. 

Now the company is seeking to sell its own premises in the city and the TV channels they house. Its television head office and studios will be for sale with a lease-back option so a buyer can continue broadcasting from there.

The plan is to sell the loss-making TV business but retain the profitable radio networks.

About 300 people could be affected by the changes. Chief executive Michael Anderson broke the news to staff during what’s been described as a tense staff meeting this morning.

“It’s clear they (Mediaworks) see zero value in the TV side of the business,” one staff member said. 

Neither does one of its former executives. 

Mark Jennings

Mark Jennings Photo: RNZ / Dru Faulkner

“Calling it a ‘sale’ is stretching it. I think it will be free to a good home,” long-serving MediaWorks head of news Mark Jennings told Mediawatch.

“MediaWorks is basically giving up on television. It’s tried to make it profitable and failed,” said Mr Jennings, a fixture at the broadcaster for almost 30 years from the early days of TV3 who is now co-editor at newsroom.co.nz

“It has tried to sell radio and TV as a package . . . but one of the reasons why MediaWorks hasn’t sold as a whole is that nobody wants the television arm. Everybody knows that in this market a free-to-air TV station doesn’t have a rosy future,” he said. 

Under former chief executive Mark Weldon, the radio and TV operations were brought together and $6 million was invested in the creation of the joint news service Newshub. This will only make it harder for the TV operation to be separated for sale.  

“The integration of the company has been a failure. It was opposed by experienced executives including myself,’  said Mr Jennings. 

“If the right new owner comes in, it can survive but it will be a slimmed-down version of what it is now,” he said.

“Whoever takes over will be staring at losses of around $5-10 million. They’d have to have a pretty good plan to turn that around,” he said. 

Interest from Australia’s Channel 7 was reportedly mentioned at MediaWorks this morning. 

On Newstalk ZB, former TVNZ news chief Bill Ralston - also a former host on TV3 in days gone by - named Spark, Vodafone, Sky and NZME as local digital media companies that may have an interest in buying MediaWorks TV. 

Mr Jennings said a Sky purchase could make sense but it already has its own free-to-air channel in Prime. (Sky TV contracts MediaWorks to supply the daily news for Prime). 

“In a market that small and declining there’s too much inventory. You would have to take some of that out,” he said.  

“An overseas buyer might be interested but New Zealand media companies all have their own problems,“ Mr Jennings said. 

Stuff’s Australian owner Nine has not been able to find a buyer for the New Zealand business anywhere in the world. 

Since early 2018, MediaWorks top brass have been warning that the TV market in its current form in New Zealand is not sustainable. It has aggressively urged the government to address what it sees as competitive advantages for state-owned TVNZ.  

The government is currently in the midst of a re-think of broadcasting and media policy and has signaled an announcement by the end of the year. 

Michael Anderson, MediaWorks chief executive.

Michael Anderson, MediaWorks chief executive. Photo: supplied

Stuff reported today Mr Anderson “left the door open to changing its plan to sell its television business if government media policy change.” He told the The New Zealand Herald rumours the TV channels could close by Christmas were not true and he was “angry” about claims the sale was a bid to pressure the government.  

So far, broadcasting and digital media minister Kris Faafoi has not responded. 

“It’s too late for MediaWorks. Any change he might instigate  - like making TV1 non commercial as MediaWorks wants - that would take at least 12-24 months. MediaWorks does not have that time and its owner Oaktree is out of patience,” Mr Jennings told Mediawatch. 

Crisis after crisis

Soon after launching in 1990, TV3 went into receivership. The law was hastily changed to allow Canadian company CanWest to take over.  

The company and its management have changed several times since then, bringing upheaval and uncertainty each time but TV3 - and the other channels - have carried on broadcasting regardless. 

Mr Anderson is right to say: "The role Three plays in New Zealand society is significant, from Newshub through to investment in local comedy and drama.” 

“This is where the government will be concerned. It really won't want to lose the TV news service from MediaWorks,” said Mr Jennings. 

“That’s where the government might be thinking about short term and earlier intervention,” he said.