Bidders come forward for Canwest's NZ assets

By NZPA

Monday 17th June 2002

Canada's largest media company CanWest is understood to be progressing with the sale of its New Zealand assets, having announced last month they were on the block.

The Sydney Morning Herald reported today that Australian-based Ten Network, 57.5 percent owned by CanWest, and Prime Television have lodged indicative bids for CanWest's radio and television assets.

JB Were is handling the sale process, which was formalised recently after years of rumours the Canadian company was ready to quit New Zealand.

In May, CanWest said it was preparing to sell some assets, including TV3 and TV4, and its MoreFM and RadioWorks stations in New Zealand, to help repay about $C3.9 billion ($NZ5.3 billion) in debt.

The media company's debt doubled last year while profit fell 74 percent after it acquired most of Canadian press baron Conrad Black's newspaper assets. However, CanWest said last month there would be no "fire sale" of its assets.

There is understood to have been substantial interest in CanWest's radio and television networks, both in terms of the value of bids and the number of parties, but no timetable appears to have been set.

Given the international quality of CanWest's New Zealand assets, it is understood that interest has come from further afield than Australia and New Zealand.

Steve Allen of Sydney-based media strategy company Fusion Strategy said Ten, because of its association with CanWest, was likely to have bid for the assets.

Australia and New Zealand's media industries were minnows compared with other countries and did not have the population to generate large returns for shareholders.

"But that said, because we're stable governments and stable economies and speak English, we attract a variety of people who watch the market and look at assets.

"A number of North American combines have at least come and looked at the media scene (in Australia)."

CanWest has changed its tune since April when the company confirmed it was carrying out a "routine" review of the New Zealand units, but denied they were for sale.

"They've indicated they don't consider it's a long-term strategic asset," Mr Allen said.

CanWest, Ten and Prime would not comment today.

Prime Group chief executive Brent Harman was due to arrive in Auckland tonight from Australia.

The Sydney Morning Herald said in the report today, without quoting any sources, that Ten had bid for both TV and radio assets, while Prime NZ was bidding only for the TV assets.

The New Zealand assets were understood to come with a $350 million price tag -- up to $150 million for TV3 and TV4, and $200 million for its radio assets.

In 2001 TV3 and TV4 made an operating loss of $12.2 million, compared with $26 million earnings before tax, depreciation and amortisation (ebitda) in 1998.

The radio operations improved ebitda to $22 million.

CanWest's NZ television networks compete with TVNZ, which has 78 percent of the market.

Its radio unit competes with Radio New Zealand and The Radio Network, owned by APN News & Media and San Antonio-based Clear Channel Communications.

Sky TV has also previously said it may be interested in buying the assets, which CanWest spent about $300 million to acquire.

Other potential bidders include Kerry Packer's Sydney-based Publishing & Broadcasting; Australia's largest radio network Austereo; and DMG Radio Australia.

DMG, a unit of London-based Daily Mail & General Trust, has about 64 radio stations in Australia and has been buying overseas assets because it is restricted at home by competition policy.

CanWest is not considering selling its stake in Ten, Australia's third-largest television chain.

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