MediaWorks has reported a loss of $4.8 million for the year ended 31 December 2020.
This marks the first financial report from the company since the sale of its television arm to Discovery in September 2020.
The latest result included a $12 million impairment charge taken against the business relating to a tough year faced by the outdoor side of the business.
Without that impairment charge, the business would have recorded a $7 million profit.
The recent change in the corporate structure of the firm makes direct year-on-year comparisons difficult, particularly because the results were not broken down across the various segments of the business.
In its previous financial results to December 2019, the company slumped to a $25.14 million loss.
A major contributing factor to that loss was a $21 million impairment, which was at the time attributed to the precautionary write-down of the TV assets in preparation for the sale.
The sale of the television business left the company with radio and outdoor assets.
The company’s latest financials show an operating Ebitda of $34.6 million off the back of gross revenue of $184 million.
The company has reduced its net debt by 24.2 per cent to $85.45 million.
MediaWorks chief operations officer Jeff McDowall the company was comfortable with this level of debt, particularly after signing a recent agreement with a New Zealand-led banking syndicate to refinance existing debt.
MediaWorks CEO Cam Wallace says that the results are pleasing given the context of a global pandemic and associated drop in advertising revenue.
“To achieve these results in a year when outdoor advertising revenue fell by 32 per cent and radio advertising revenue fell by 14 per cent is a reflection of the underlying robustness of our business and the strength of our brands,” he said.
“We have already seen advertising revenue recover well, and that along with ongoing cost
management, and a number of steps taken to get the business match fit provides us with a clear path to profitability in 2021.”
MediaWorks Radio received $4.09 million from the Government’s first phase of the wage subsidy programme, while its outdoor arm QMS received a total of $668,000 over three separate applications.
Staff at the company were also asked to take a voluntary pay cut of 15 per cent, although this was returned at a later stage as the advertising market picked up.
MediaWorks is currently 60 per cent owned by hedge fund Oaktree Capital and 40 per cent owned by outdoor advertising business QMS. This structure came about following a 2019 merger deal that saw QMS also pocket A$35 million.
Until Covid-19 hit, outdoor advertising was the fastest-growing medium in the industry.
With people confined indoors during lockdowns and working from home, advertising spend in this area reduced rapidly.
McDowall told the Herald that the $12 million impairment on the business could be attributed to the outdoor side of the business.
He said that a conservative assessment of the valuation of the business amid the continued uncertainty in the industry led to this large impairment.
New Zealand remains vulnerable to future lockdowns and breakouts, necessitating a more cautious view on how quickly industries can recover and grow.
Wallace has previously told the Herald that he sees opportunity for consolidation – and perhaps a few further acquisitions – in the outdoor sector.
He reiterated this today, saying: “Across the MediaWorks business we have identified a number of potential acquisition opportunities and are actively exploring these.”
He said these opportunities aren’t limited to one sector and that the company was looking at numerous options to improve the business across the board.
There have long also been rumours of MediaWorks eyeing a stock market listing in the near future. And while Wallace didn’t confirm this was definitely going to happen, he did say the company was looking into its options.
“We are also currently assessing our capital structure and how this can best contribute to the ongoing growth and success of the business.
“We expect this work along with a broader strategy piece to be completed within the year.”
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