Jeremy Corbett, Jesse Mulligan and Kanoa Lloyd of The Project. Photo / Supplied
Jeremy Corbett, Jesse Mulligan and Kanoa Lloyd of The Project. Photo / Supplied
The Herald revealed this morning how MediaWorks' overseas owners had struck an unconditional agreement to sell their New Zealand headquarters in Auckland for $26 million, due to settle in three months.
As is often the case with news events, this has posed a number of questions on thefuture of the business and the talent involved.
Here are 10 key questions answered.
Bayleys' marketing of the Eden Terrace properties. Photo / Bayleys Real Estate
1. What arrangements are likely between MediaWorks and their new landlord and is it now likely that MediaWorks will move?
A: Property owners or investors now become tenants and begin paying rent. MediaWorks won't shift. CEO Michael Anderson already confirmed that this morning, saying staff would notice no difference. Landlords always want good tenants to stay in place, pay the rent and for unsettled periods - such as the sale of properties - to settle down so everyone can get on with business. The mantra of the landlord and tenant is often "it's business as usual" and that's the catchcry between these two parties. Layne Harwood, principal Bayleys agent on the sale, said today: "This sale allows MediaWorks to stay there for however long they want, for continuity of the television business. It's not a redevelopment site. It's business as usual. They're local buyers entering into a lease with MediaWorks TV Ltd."
A: Pay off debt, use it as an operational reserve to continue to run the business or perhaps satisfy creditor obligations. The TV business remains on the market and despite speculation of interest, no announcement has been made about that yet. Last May, the Herald reported how the business made a $4.4m loss for the year to December 31, 2018, close to the $5.7m loss reported a year before but better than 2016's $14.8m loss.
MediaWorks' headquarters has been conditionally sold. Photo / Alex Burton
3. What does the sale mean?
A: Cash, cash, cash and quite fast, all by April 1. The property sale is a big balance sheet boost for the loss-making business, chairman Jack Matthews admitting on October 18 it was "in a commercial environment and [we] have to face commercial realities. The market that free-to-air television operates in is tough and has been exacerbated this year."
4. Why did MediaWorks decide to sell its properties?
To survive and stay in business. Plus lots of non-property businesses say real estate is not part of their core operations and they have no need to own their property. Matthews said the business was "committed to continuing to grow its business" here. It announced its intention to sell MediaWorks TV and its Flower St property with the TV head office and studios.
5. Why were these buyers keen on those properties?
They made an offer close to Auckland Council's valuation and got it for near that price, so they would undoubtedly see the purchase as good from their perspective. Also, location, location, location - this area of town's future is seen as bright given so much work on the Mt Eden Station and its link into the CRL network, meaning the CBD will be merely minutes away by around 2024 and able to be accessed by three stops - Britomart, Aotea and Karangahape. Redevelopment is a long-term proposition but so is leasing to other commercial tenants. Bayley's Harwood said one of the New North Rd properties was leased to a cafe, which in turn would now pay rent to the new owner. The sale went unconditional before Christmas and is due to settle on April 1. "We had it down to four tenders in the end. The buyer is local, as you know."
Bayleys' sign saying the properties have all been sold. Photo / Bayleys
6. Who are these buyers?
Their identity can't be revealed. The deal is subject to strict confidentiality arrangements. But it's fair to say the group is private - and there's essentially one person behind it. He's a very wealthy New Zealand-born individual with a love of property, extensive long-term investments and interests already connected to the media sector.
7. Could there have been any snags buying these properties?
A: Yes - and it was partly subterranean. Concerns had been expressed from the MediaWorks camp some years ago about the construction of the $4.4 billion City Rail Link and the potential harm the creation of tunnels and underground works could have caused to the stability of its main HQ premises. The fear was that the foundations would crack. So building structure monitoring devices have been put in place and evidently, it's so far so good.
CRL demolition near MediaWork's Eden Terrace headquarters. Photo / Michael Craig
8. Will the buyer really settle or could they pull out before April 1?
A: The deal went unconditional last year and the buyer won't withdraw for many reasons, partly due to being so well capitalised and an established dealmaker, but his entity is also contractually obliged to settle, giving little ability to escape once the tender has been accepted.
9. What lease agreement would have been struck?
A: MediaWorks wants to stay, due to the complexity of moving such a big kit and the new owners want them to stay too. Rent might be around $1m a year but that will be determined by the length of tenure and what clauses are in the lease - demolition clauses give a tenant less certainty and often a lower rent is set due to the disruption sudden need to move would cause.
10. What does it mean for the future of MediaWorks?
A: Security. This gives potentially a more certain future because the Australian and American owners are getting that much money out in one quick hit. Certainly, speculation that the business could close before Christmas proved totally incorrect. MediaWorks says it connects with 1.1 million Kiwis aged 24 to 54 on a weekly basis with a mix of radio, television and digital assets.
So in all likelihood, we'll be seeing more of Kanoa, Jesse and Jeremy for the foreseeable future.
