MediaWorks to merge with outdoor ad giant QMS

MediaWorks and QMS are looking to merge. Photo/File.

Broadcaster MediaWorks is exploring a potential merger with ASX-listed QMS Media's New Zealand outdoor advertising business.

QMS said it has signed a heads of agreement for the proposed merger which is subject to final binding terms and conditions.

The deal would create a new entity offering radio, television, digital and out-of-home advertising in New Zealand.

It is understood the new entity would be 60 per cent owned by MediaWork's hedge fund owner Oaktree and 40 per cent by QMS Australia.

QMS Media chairman Wayne Stevenson said: "New Zealand is important to our business and we are excited about the potential opportunity to create a leading multi-media group that will transform the New Zealand advertising business."

The Herald understands MediaWorks' staff were told to attend a meeting this morning ahead of an announcement.

MediaWorks recently informed staff of a pending restructure of its radio business including merging RadioLIVE with its existing Magic network and rebranded as 'Magic Talk'. This is expected to be confirmed today.

The company's most recent result showed a net loss of $5.7m for the year to December on revenues of $300.2 million.

Oaktree has been looking to reduce its exposure to MediaWorks. Last year the US hedge fund was reportedly in talks with Southern Cross Austereo to sell the company's radio assets.

Oaktree took full ownership of MediaWorks in 2015 when it bought the minority shareholdings of rival private equity firms TPG Capital and Bain Capital, following receivership and a debt restructure.

MediaWorks chairman Jack Matthews said the proposed merger represented a significant investment in and commitment to New Zealand. He said MediaWorks had made great strides over the past two years under chief executive Michael Anderson.

Michael Anderson, MediaWorks CEO. Photo/File.

The radio assets have long been the most coveted aspect in the MediaWorks portfolio of assets, and earlier speculation suggested that QMS might only be interested in acquiring part of the company.

The PR from MediaWorks today does, however, trumpet a unique quad-play that would see four media channels coming together under a single umbrella.

While other traditional media channels have struggled to cope with digital disruption, the outdoor industry has managed the shift more smoothly.

Ad spend data from the Outdoor Media Association of New Zealand (OMANZ) shows the amount of money spent on outdoor advertising has steadily increased over the last six years.

Nielsen figures show the total amount spent on outdoor advertising has risen from $95 million in 2015 to $140 million in 2017.