Recession crunches down on branches of media business

Another media company liquidation illustrates tough times in the magazine business.

GGK Holdings - formerly Armada Publishing which had owned Player and Cue - went into liquidation on May 5.

The news follows Fairfax Magazines' decision to encourage staff to reduce hours so it can avoid job cuts.

Last week Fairfax Media revealed it was seeking registration under the nine-day fortnight scheme where staff are compensated for lost wages with government subsidies.

It also follows the announcement earlier this month from New Zealand's largest trade magazine publisher 3 Media - with titles such as AdMediaand Onfilm - that it was going into voluntary liquidation. The BNZ bank also called in the receivers on May 4. The change coincided with 13 redundancies.

On May 14 liquidator Gerry Rea's first report on 3Media said he was advised by management that liquidity problems had arisen.

"They wished to sell off the various publications in an orderly manner in co-operation with the liquidators in an effort to maximise the return for creditors.

Details of creditors are being delayed while receivers KordaMentha look at the company's finances.

On May 5 GGK Holdings appointed Meltzer Mason Heath as liquidator and in his first report Mike Lamacraft said the company had not been profitable during 2008.

It had been supported by more than $3.3 million advances from shareholders.

"Further advances could not be justified and efforts were made to sell the business. All realisations were paid to the secured creditors," said Lamacraft. Unsecured creditors could not be paid and so the decision was taken to put the company into liquidation.

The liquidator's report said the Inland Revenue Department was owed $190,000 and unsecured creditors $280,000. The company has no assets.

Liquidations have been limited to small media companies. Corporate upheavals are linked to the global downturn and an unprecedented drop in advertising revenue:

Fairfax Media - Australian based company, owns the Sunday Star Times, NZ House & Garden, Stuff. Last week reduced profit forecasts and Standard & Poors downgraded its credit rating. Laying off 10 Sundays division staff.

Irish company Independent News & Media - Assets include 39.2 per cent of APN News & Media as well as The UK's Independent. INM has been under pressure to repay bondholders and was recently restructured.

US Clear Channel Communications - US radio giant owns The Radio Network with APN. Is restructuring its debt load, the New York Post reported.

APN News & Media publishes titles such as the NZ Herald, NZ Woman's Weekly and the Listener and owns half of TRN. Has reduced advertising staffing levels by 10.

TRN - owns half of New Zealand radio industry including Newstalk ZB. Coast, Flava and Radio Sport. Recently cut staffing levels.

MediaWorks - owns TV3, C4 and half New Zealand's radio stations. Reported bottom line losses of $40.3 million for the August 2008 year.

TVNZ - state owned broadcaster. Owns TV One and TV2. Recently laid off 88 staff and is making cuts to programming budgets to meet a downturn in advertising revenue.