After years of keeping the company afloat, the radio arm of MediaWorks is finally being rewarded for its efforts.
The highly successful radio business has had little investment as the broadcaster focused desperately on shoring up its underperforming television networks, Three and Four (Bravo).
Now, partly to protect its cash cow and partly to foster growth in one of the few profitable sectors of the media, MediaWorks is loosening the purse strings at radio.
Major refurbishments have taken place at stations in Southland, Taranaki and Tauranga, and a new facility will be opened soon in Whangarei.
MediaWorks recently scooped up Port FM in Timaru, one of the last independently owned stations, for $4 million.
More significantly, the company plans to centralise its Auckland radio operations, which have been scattered around various parts of Ponsonby in a flash new home in nearby St Mary’s Bay.
It’s expected to announce shortly that all its stations including powerhouse brands like The Edge, The Breeze and More FM will relocate to a renovated warehouse building equipped with the latest digital technology.
The trio, plus Mai FM which now has 250,000 listeners in Auckland, are the country’s top commercial stations and moved further ahead of competing NZME brands in the latest ratings survey.
MediaWorks has a 58 percent share of the 25-54 audience and is riding the wave of change from rock to easy listening and hip hop formats.
At the presentation of its financial results yesterday, chief executive Michael Anderson also signalled a new focus on its lame duck talk station, Radio Live.
Live has been around for 10 years but has been consistently hammered in the ratings by Newstalk ZB.
“Lots of things have been tried but they have tended to be short-term and opportunistic. When they haven’t worked they have been let go,” said Anderson.
Anderson, a long-time executive in Australian radio, has gone to his own contact book for help and hired two Australian consultants in what looks like a last ditch attempt to sort the station out.
“They are people I’ve worked with and we are now taking a long term view and our aim is to win the 25 to 54 year old part of the audience.”
Anderson has been steering MediaWorks into calmer financial waters and announced the company has pared back its losses from $14.6 million in 2016 to $5.7 million in 2017.
He told Newsroom if TV ratings and revenue continue to stay on their current track the company would break even this year, but he conceded it would be a tough task.
“In this environment I am scared to put a number on it. I don’t think I have ever seen a market as lumpy as the one we have at the moment.”
Three’s strategy of putting most of its resource into local reality shows for prime time and spending as little as it can in off-peak slots is working – to a degree.
The Block, Married at First Sight and now Dancing with the Stars have delivered good numbers. What is not performing is the early evening schedule – Newshub at 6 and The Project.
Newshub at 6 is hampered by One’s powerful 5.30pm lead-in programme The Chase. There are now times when the British quiz show actually has a bigger audience than Newshub and makes One News virtually unassailable.
This week, MediaWorks rebooted its marketing campaign for news but it is hard to see it making any impact until it finds a better lead-in.
‘We’ve looked everywhere, there is just nothing much out there,” said Anderson.
The 7pm slot is an even tougher battle. TV2’s Shortland Street maintains a vice-like grip on its viewers and Seven Sharp benefits from the big audience flowing from One News. Apart from its fans, The Project is left trying to get the small number of viewers who are moving around the channels at 7pm.
“It is a difficult show to execute well, so the challenge is to do that as consistently as we can.”
It is hard to see what more Anderson and his team can do to lift Three’s peak time share further. Last year Three got a 20 percent share of 25 to 54. TV2 had a 20.5 percent share and One was still in front with a 22 percent share, although that has been trending down over the past three years.
According to Anderson, Mediaworks’ owner Oaktree, an American private equity company, isn’t prepared to stump up any more money.
Oaktree put an additional $14.5 million into the business in 2016 and another $8 million last year. It is also a significant debt holder.
One of the problems for MediaWorks is the structural distortions of the local TV market. TVNZ is state-owned and has been able to write down a lot of programming costs, and Prime loses money but is a valuable outlet for its owner Sky’s free-to-air sports rights. Add to that the explosion in streaming services like Netflix, and the chances of MediaWorks making any real money out of TV are slim at best.
The highly profitable radio arm remains the key attraction for any would-be buyer and keeping it in peak condition makes a lot of sense.