A lifeline for MediaWorks’ television business, plus the ‘spread payment’ firm Laybuy debuts strongly on the ASX

MediaWorks sells off its television division

Private broadcaster MediaWorks will be relieved to have finally found a buyer for its unprofitable free-to-air television division.

Discovery Channel has bought the television brands for an undisclosed sum. The well-known multinational broadcaster had been widely tipped earlier this year as the likely buyer of the MediaWorks assets.

The deal is subject to a number of approvals and is expected to be completed by the end of the year.

MediaWorks has been trying to sell the TV business for some time after struggling to get the free-to-air Three network to turn a profit. It has been particularly hard hit by the Covid-19 pandemic due to the loss of advertising revenue and unlike rival TVNZ with its Government backing, MediaWorks has been unable to draw on the financial resources of its owner, California based Oaktree Capital Management.

The acquisition by Discovery will significantly expand its New Zealand reach to six pay-TV channels on SKY and eight free-to-air channels, plus Newshub and the streaming platform ThreeNow. In addition to its well-known Discovery channel its other television brands include Animal Planet, Food Network, The Living Channel and Choice TV.

Three’s audience has been haemorrhaging in recent years falling to 23 percent of all New Zealanders aged 15 and older, from 35 percent in 2014 according to a recent NZ On Air survey. Its 3Now streaming platform has continued to languish since launching in 2014.

MediaWorks chief executive Michael Anderson, who oversaw the sale, has announced his resignation and will leave the broadcaster at the end of the year.

Laybuy makes strong debut on ASX

Another kiwi business has bypassed the NZX to debut strongly on the Australian Stock Exchange.

Pay later provider Laybuy’s shares soared as much as 63 percent in the opening minutes of trade peaking at A$2.30 on the ASX.

Around 57 million shares in the company were sold in the initial public offering, including more than 20 million new shares, valuing Laybuy at more than A$240 million.

Laybuy joins a growing list of businesses capitalising on millennial shoppers ditching credit cards when they go shopping in favour of platforms offering spread payment options. The company says it offers strict transaction limits to ensure customers can afford their purchases.

The business was founded in 2017 by Gary and Robyn Rohloff and earns its income from retailers who pay a percentage of each transaction, similar to credit card companies.

Rival Afterpay has become a huge success after listing on the ASX in 2016. Its shares now trade in excess of A$70 while US payments giant Paypal has also seen an opportunity to jump on the growing ‘spread payment’ bandwagon, recently announcing it was launching Pay in 4, its own buy now, pay later product.

Laybuy reported for the 12 months ended June 30 that it had more than 5,600 active merchants, and more than 470,000 active customers transacting $500 million in gross merchandise volume annually. This had generated $20 million in revenue for the business.

Layby shares closed the day at A$2.05, near their low for the session after opening at A$2.10 and reaching a high of A$2.30. More than 16 million shares were traded on its first day as a listed company.

Serko joins the NZX50 while NZ Refining departs

The declining fortunes of NZ Refining were laid bare yesterday after its impending removal from the NZX50 later this month in favour of travel expense software provider Serko.

At 67c, NZ Refining shares are just a few cents above their March low of 62 at the peak of the sell-off. Plans by the company to largely curtail refining oil locally in favour of directly importing refined product has seen investors cashing in their shares in recent months. Refining NZ shares have fallen more than 70 percent since September last year.

Serko, by comparison, saw its shares surge more than 8 percent yesterday on news that it would be included in the NZX50. In a brief statement the company said it was pleased to have been included in the benchmark index from Monday, 21 September. Its shares closed at $4.30 having gained more than 40 percent since mid-August.

Summerset launches new $150 bond sale

Retirement village operator Summerset Group has launched a new $150 million bond sale of up to seven years, to diversify and lengthen the term of its debt, and to help fund future development.

The offer of $100 million in bonds maturing Sept. 21, 2027, with the ability to accept over-subscriptions of $50 million at Summerset’s discretion, will pay no less than 2.3 percent a year.

The actual interest rate will be set at an indicative issue margin of 2 to 2.2 percent over the swap rate, although the actual issue margin may be above or below that indicative range.

The current seven-year swap rate is 0.33 percent.

Gearing was 37.9 percent at June 30 and is covenanted not to exceed 50 percent.

Port of Tauranga announces new CEO

Port of Tauranga has announced long serving CEO Mark Cairns will step down from the role in June next year and will be replaced by current Chief Operating Officer Leonard Sampson.

Cairns, who has been CEO since 2005, previously ran Toll Owens and the Owens Cargo business.

He described the port as being “in good shape’ and said now is the right time to hand over. Already a director of Meridian Energy, he plans to pursue a career in governance.

Chair David Pilkington said under Cairns’ leadership the company had grown from a regional bulk cargo port to become the country’s major international cargo hub.

In 2005, the port handled 12.6 million tonnes of cargo and the equivalent of 438,214 20-foot containers. In the June year just ended cargo volumes had almost doubled to 24.8 million tonnes while container volumes had tripled to 1.25 million.

During the same period, the port’s market value increased almost eight-fold to $5.1 billion, delivering an annual average compounding total shareholder return of 19 percent a year, Pilkington said.

Port of Tauranga has also significantly eclipsed the Port of Auckland’s performance during his time in the role.

The company’s shares closed yesterday at $7.31, down 0.8 percent. In 2005, when Cairns took over as CEO the shares traded at less than $1.

China’s economy continues to rebound strongly from Covid

China’s exports jumped 9.5 percent in August in dollar terms compared with the same month last year — the highest increase of any month this year and above expectations of a 7.5 per cent rise.

The rise in exports underlined China’s dominant role in global trade during the coronavirus pandemic and its recovery from it. Chinese exports have risen year on year for three straight months, raising hopes of a wider resurgence in international trade that has been severely affected by the coronavirus outbreak.

China’s exports had also beaten expectations to climb 7.2 percent year on year in July after rising just 0.5 per cent in June when the metric returned to growth after a severe contraction.

While the data are closely watched for signs of global demand recovering from the pandemic, economists have, over recent months, pointed to specific coronavirus-related factors that have supported China, including big rises in exports of electrical equipment as well as medical products.

Trade also recovered at a time when other exporters have struggled. South Korea’s data released last week, showed the country’s exports fell for the sixth consecutive month in August, though exports of computers and home appliances rose sharply.

Softbank shares in Japan fall sharply after weekend revelations

Shareholders in Japanese investment company SoftBank watched yesterday as nearly US$9 billion was wiped off the value of the company’s market cap after weekend revelations that the conglomerate was the mystery “whale” that had driven US technology stocks to record highs.

The Financial Times reported on Sunday that the group’s trading strategy meant it was now sitting on gains of about $4bn after the company’s founder drove aggressive bets on equity derivatives.

Softbank has been accused of acting more like a hedge fund, populated with former investment bankers with a massive appetite for risk. SoftBank shares lost 7.2 percent yesterday — a fall that erased ¥946bn (US$8.9bn) from the company’s market capitalisation. The benchmark Nikkei 225, in which SoftBank is the second biggest component dropped 0.5 per cent.

Before yesterday’s fall SoftBank’s share price had climbed 33 per cent this year. The slide followed two days of declines on the Nasdaq at the end of last week.

Singapore’s economy set to shrink

Singapore’s economy is expected to shrink by 7.6 percent in the third quarter compared to a year ago, with the coronavirus pandemic remaining the top economic threat, according to a survey of economists and analysts by the city-state’s central bank.

That would be the Southeast Asian economy’s third consecutive quarter of year-over-year contraction. However, it would still be an improvement from the second quarter’s 13.2 percent decline versus a year ago — which remains the country’s worst quarterly contraction on record according to Singapore’s Department of Statistics.

For the full year, the survey respondents expect Singapore’s GDP to fall by 6 percent which is broadly in line with the government’s forecast for a contraction of between 5 percent and 7 percent.

Around 90 percent of respondents cited a potential worsening in the coronavirus pandemic as the biggest risk weighing down prospects for the Singapore economy. Economists were also worried about US-China tensions and slower-than-expected global economic recovery, the results showed.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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