Liam Dann: APN listing makes sense

The first edition of the new compact New Zealand Herald rolling off the press at APN Print in Ellerslie. Photo / APN

The publisher of the New Zealand Herald has today announced it is considering a sharemarket float for its NZ business.

The New Zealand stock market continues to run hot in 2014. We've seen initial public offers by power companies, tech companies, agriculture companies and now a major media company - potentially.

The announcement that APN News & Media, Australian parent company of the New Zealand Herald - is exploring the option of a market listing for its New Zealand assets is an exciting one.

The timing makes sense. The New Zealand market is strong.

The company's local operations have been strengthened greatly by the full merger with The Radio Network (TRN) which includes Newstalk ZB.

Opportunities for integration and leveraging the combined strength of the company in the advertising market are being explored and a major transformation is underway.

While the difficulties facing the newspaper business have been well documented advertising revenue for the radio industry has remained solid.

In fact the New Zealand Herald print editions have maintained extremely strong readership and circulation while the online audience has continued to grow. The biggest challenges for print are specifically in dealing with the rapidly shifting structure of the advertising industry. The newspaper has dedicated significant resources to adapting to new trends and of course there are ongoing plans to move the NZ Herald online to a subscription model.

APN shares have surged 130 per cent in the past 12 months. There has been favourable commentary about the company's cost focus, moves to shore up its balance sheet and its acquisition of TRN.

Whether the local market is as enthusiastic about the outlook remains to be seen.

In the end, as with all public offerings, the outcome will depend on price.

The process of agreeing a valuation and setting a price will be what determines whether this IPO goes ahead. There has to be enough immediate value for APN and enough future value for the new investors.

If that balance is achieved then this has the potential to be an excellent result for the New Zealand stock market.