Radio and outdoor advertising media company MediaWorks has today posted a net after-tax loss of $107.1 million after an impairment of $86.5 million – it insists its “turnaround” is on track, despite a
challenging economy and media market.

For the second consecutive year, auditors have said “material uncertainties” exist which cast “significant doubt” on MediaWorks’ ability to operate as a going concern but the company says this was before refinancing was completed and it is confident it has the capital to deliver the company’s strategy.

The company says “existing debt facilities were amended with the support of our shareholders and lenders shortly after the finalisation of our FY23 accounts”.

In those accounts released today, MediaWorks posted ebitda of $34.6m (up from $34.4m last year) and a net loss before tax of $14.2m million (compared with a $9.7m net loss before tax last year).

Total revenue was $204.1m, a 5 per cent drop from the previous year, but the company has also slashed costs – operating expenses were $11m less than those in 2022.

MediaWorks is positive about the results, with chairman Barclay Nettlefold saying the company is “performing well” in unfavourable conditions and chief executive Wendy Palmer saying she was pleased with the company’s progress.

MediaWorks highlighted growth in outdoor direct revenue, up 13 per cent on 2022, and digital revenue growth, up 20 per cent.

In a note attached to the results – completed before refinancing was complete – the company said the group had net assets of $32.8m as at December 31, 2023, compared with net assets of $140.6m last year.

Negative working capital was $115.7m and cash balances were $12.3m.

“The group has continued to find trading conditions challenging during 2023,” says the note.

“In response, the group has continued to focus on cost and profitability optimisation in 2023 with the closure of loss-making news division Today FM and further cost-savings programmes.

“The group is in the process of negotiating revised lending terms with its lenders. While negotiations are in progress, the lenders have indicated their continued support for the business including waiver of the financial covenants from September 30, 2023 up to the date a new agreement is signed, an extension of the maturity date of the facilities, revised financial covenants from March 31, 2024 onwards and deferral of debt amortisation payments until March 31, 2025.

“The lenders’ ongoing support is subject to completion of an equity injection from the shareholders and the group continuing to make interest payments as they fall due.”

The note said directors had concluded that it was appropriate to continue to prepare the financial statements on a going concern basis because the group was in positive discussions with its lenders to extend the maturity date of the facilities and reset financial covenants.

“The lenders have indicated their continued support for the business (subject to credit approvals and the requirements outlined above).”

The company confirmed today that refinancing had been completed.

Asked for more details, Nettlefold said: “The details of the debt facility amendment are confidential between the shareholders and our lending syndicate. Having said that, the board is confident that the revised agreement and our injection of capital provides the runway required to deliver on the company strategy.”

Auditors PWC said that, as stated in the accounts note, the ability of the group to support its ongoing operations for the foreseeable future was dependent on the successful renegotiation of lending terms with its lenders and the group’s ability to meet the terms of those revised agreements on an ongoing basis.

“As stated in Note 2, these events and conditions, along with the other matters set out in Note 2, indicate that material uncertainties exist that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

In a press release, Nettlefold said the business had performed well in unfavourable conditions.

“The media industry in New Zealand continued to weather a storm in 2023, with high interest rates, high inflation and the country dipping into recession.

“In this difficult environment, CEO Wendy Palmer and the team managed to maintain earnings by restructuring aspects of the business to save costs, which has been critical in the current economic environment.

“The board is confident in the strategy the executive team has put in place to turn the business around and transition to a digital future.

“We have extended our banking arrangements with the support of our existing lenders, which gives the team the flexibility and runway needed to execute their strategy.

“They are simplifying the business around the two core pillars of customer and audience and we’re backing them all the way.”

Palmer said she was pleased with the progress MediaWorks made “in another challenging year for the industry”.

“We made some difficult decisions and set a path to turn the business around. We are reshaping our business to ensure we are the first choice for media – for our customers, audiences and for our people. While there’s still work to do, I’m really proud of how we’re tracking against that plan.”

She cited the launch of Channel X, the recent relaunch of Duncan Garner’s podcast – now a live show – and the hiring of Simon Barnett for More FM in 2025 as highlights of MediaWorks’ progress.

Today’s accounts outline restructuring costs of $6.05m in 2023, most of which are likely to be attached to the closure of Today FM.

MediaWorks chief financial officer Mike Asbridge said: “These items cover costs associated with the change programme announced at the start of 2023, the closure of Today FM, costs associated with the refinancing of the business, professional services and other non-recurring costs. The settlement costs for Today FM are confidential to the parties involved.”

Asbridge also provided a general outlook today, saying the year had got off to a solid start.

“In Q1, we’ve seen revenue and ebitda on target despite the economic conditions being worse than expected.

“We have strengthened our sales leadership across both agency and direct sales. This is starting to pay dividends, with direct and committed revenue growing as a proportion of overall revenue. We’ve also added dedicated resource to provide our agency customers with specialist platform advice across radio, out of home and digital.

“While business confidence remains low impacting advertising spend, we’ve seen growth in digital revenue outpace the market. We are continuing to invest in our digital platforms and audio content to further capitalise on this growth.

“It’s still tough out there for the media industry. We have made good progress in finding efficiencies and need to ensure that we remain focused on these opportunities across the business.”

Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.