APN shelves NZME float on weak ad market, puts Australian regional papers on block

Thursday 25th February 2016

APN News & Media has shelved plans for an initial public offering of its NZME division in New Zealand due to a weak advertising market, while at the same time putting its Australian regional newspapers up for sale as it wrestles with the growing importance of digital platforms.

The Sydney-based company reported a loss of A$10.2 million in calendar 2015, including a A$48.3 million charge against the Australian regional papers' mastheads, from a profit of A$11.5 million a year earlier. Earnings before interest, tax, depreciation and amortisation from continuing operations increased 1 percent to A$166 million, while revenue rose 1 percent to A$850 million, due largely to the media group's Australian Radio Network.

NZME, which publishes the New Zealand Herald newspaper and operates The Radio Network, posted a 3 percent decline in revenue to $433 million and an 8 percent decline in ebitda to $74.9 million. Advertising from its publishing division fell 4 percent to $179.6 million and circulation revenue declined 5 percent to $93.6 million. The radio unit's agency revenue dropped 11 percent to $46.2 million and direct revenue was down 3 percent to $72.4 million.

APN planned to list the New Zealand division, which has undergone an integration of the radio and publishing arms, but today said "the advertising market environment is not currently conducive to an IPO and APN will not pursue this approach at this time."

While the Australian media group said it wanted NZME to be appropriately funded to maintain its position in the New Zealand market, "there is a need to prioritise APN's strategic investments and focus on assets that will deliver the greatest shareholder return" and it "is actively considering its options for the business and will provide a further update to shareholders at the AGM in May."

As part of that shift in focus, the company announced plans to sell its portfolio of 12 daily and more than 60 non-daily Australian regional newspapers to let it focus on its digital growth strategy.

"APN has been a long-term supporter of regional publishing in Australia, however our future investments must remain focused on growth assets and opportunities," chief executive Ciaran Davis said. "New ownership should give ARM the flexibility to invest where required, to continue to provide quality news and content to its audiences, without having to compete for APN's capital."

The regional paper division posted a 27 percent drop in ebtida to A$18 million on a 7 percent fall in revenue to A$188.5 million.

The company's Australian radio division was the best performer in the year, lifting revenue 22 percent to A$22 million for a 25 percent gain in earnings to A$82.8 million. Its Adshel outdoor advertising joint venture lifted revenue 8 percent to A$159.5 million for a 4 percent gain in earnings to A$38 million.

The board didn't declare a dividend.

The dual-listed shares last traded at 55 cents on the NZX and 50 Australian cents on the ASX.

BusinessDesk.co.nz

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