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ANALYSIS: Experts have been speculating wildly about Stuff’s future in the wake of the NZME stock exchange announcement that it had called for a change of law allowing it to buy Stuff for a dollar.
But all we really know for sure is that Australian Stuff owner Nine would sell Stuff if he could, at an appropriate price, and that a sale appears to be coming to a head after being in the background last year.
A Nine spokesperson says it continues to have talks with “a variety of stakeholders” about the Stuff sale.
And no, the starting price for Nine doesn’t seem to be $ 1.
Shortly after NZME’s surprise announcement to the NZX on Monday, Nine revealed that it had ended talks with NZME last week, meaning there is no $ 1 transaction with NZME for the government to approve.
READ MORE:
* The NZX Regulation contacted NZME regarding the Stuff acquisition statement
* Media company NZME reduces workforce by 15%
* NZME says the new merger agreement would be “under discussion” after a while
An assertion by one commenter, citing unidentified sources, that Nine had told the government that it would close Stuff in late May if it couldn’t find a buyer was also taken down by Nine.
A Nine spokesperson confirmed that it had not given the government that deadline.
What other Stuff suitors might have is largely speculation.
TVNZ remains a possible candidate, now that Broadcasting Minister Kris Faafoi has put the TVNZ-RNZ merger on ice.
Chief Executive Kevin Kenrick did not disclose last year whether he had searched for an informative memo from Nine about the Stuff sale, but he did drop many hints that he was interested.
They included making it clear that TVNZ had high ambitions in the online news space and would look at anything that might help with that and “weigh it accordingly.”
Allowing TVNZ to buy things would be a safe option for the government if it were concerned that Stuff’s large media operation would fall into “unwanted” hands.
But that doesn’t mean it’s in the cards.
An acquisition of Stuff by TVNZ could solve one problem for the government, but cause another by making NZME’s viability more precarious.
There may be interest from other established players, like Sky TV, perhaps, or MediaWorks majority owner Oaktree, but this is a guess.
Not for syndication
TVNZ CEO Kevin Kenrick seemed to hide a bit of interest in Stuff last year, but is the time past?
There is some known and rumored interest in Stuff from local media moguls and private equity firms.
But there is little or nothing that can be said significantly about whether any or many could come up with an acceptable purchase price for Nine.
Maybe, but probably not.
However, it’s worth pausing on one of the oddities of NZME’s initial release to the NZX, which was that it specified a price, one dollar, at which NZME wanted to buy things.
NZME spokesman Cliff Joiner declined to comment if he was assuming that Nine would become a minority owner of a merged business as part of such a deal, as anticipated by the companies’ original merger discussions in 2016.
But the main purpose of the publication seemed to be to inform the market that NZME had reached out to the government, asking it to pave the way for a takeover, and had filed an authorization request with the Commerce Commission.
The statement was titled: “NZME requests urgent government action.”
As such, there was no obvious need for NZME to reveal any potential pricing for their planned transaction, let alone one that they hadn’t even agreed to with Nine.
The most benevolent explanation is that NZME was simply trying to bring to the government the problems it thought the media industry had.
Simon Maude / Things
NZME’s motivations in setting a desired purchase price for Stuff seem unclear.
Ironically, NZME’s actions on Monday may shed more light on its own circumstances than on Stuff’s.
While Nine clearly wants to leave New Zealand, he is not under any outside pressure to sell things, which is best described as irrelevance rather than burden on his business.
Nine is valued at A $ 2.45b (NZ $ 2.6b) on the ASX and its share price has increased in the past two months.
But NZME, which has already responded to the coronavirus crisis by causing 200 employees to be laid off, does not have such deep, if disinterested, support.
NZME is valued at $ 53 million on the NZX and had already suspended dividends to pay off debt before Covid-19 hit.
Analysts have tended to think that NZME is made up of two main businesses: a troubled newspaper and an editorial arm similar to Stuff’s, and a more desirable radio business.
Only time will tell if that narrative will remain compelling in a post-Covid-19 world.
On a select committee in mid-April, Stuff CEO Sinead Boucher said her advertising revenue has more than halved in recent weeks, and NZME managing editor Shayne Currie said she also he had seen a 50 percent drop in April.
NZME’s short-term fortune could improve if it merged with Stuff, or if Stuff was significantly reduced, but if not, it faces tough questions.
NZME shares on Monday had a hint of panic about them, and no one in the media industry should enjoy that.
There was a major subplot to market confusion on Monday.
NZME shares rose 17 percent in the wake of its morning announcement on Stuff.
The NZX Regulation could have been expected to respond to Nine’s ASX statement that the negotiations had ended by immediately suspending trading of NZME shares, until NZME provided clarity.
But instead of taking such firm action, the NZX Regulation contacted NZME on Monday and the result appears to have been the short follow-up statement that NZME issued to the exchange early on Monday afternoon.
NZX spokesman David Glendining explains the actions of the NZX Regulation on Monday as follows:
“The NZX Regulation initially increased inquiries about NZME immediately following media reports on the status of discussions between NZME and Nine Entertainment, which we note preceded the launch of ASX by Nine Entertainment.
“That included getting involved with NZME and its outside legal adviser at various points yesterday morning regarding NZME’s statement on the Stuff acquisition process, even before the release of Nine Entertainment’s statement on ASX.”
“Given the information that was available to the market at the time, the NZX Regulation deemed it more appropriate for NZME to clarify the status of the discussions between the parties, regarding the exclusive negotiating agreements that had been agreed,” he says.
Not for syndication
The NZX says its regulatory branch engaged with the NZME’s top lawyer multiple times on Monday.
NZME’s second statement to the NZX recognized Nine’s statement that the talks between the companies had been suspended, while offering justification for their original launch to the NZX.
NZME said its opinion was that it was still in a period of binding exclusive negotiation with Nine, and that it did not accept that the exclusivity had been validly terminated.
That doesn’t seem to be Nine’s opinion on the current situation.
Anyway, that’s true unless someone seriously suggests that the NZME hopes that the government will not only clear the way for it to take over, but also grant it some sort of “mandatory purchase order” that requires Nine bandages Things at a price you can afford.
That would be an illusion of NZME in the extreme.
Sure, the discussions between Stuff and NZME could be revived.
Depending on Stuff’s other suitors, that might even be a decent result, but it doesn’t seem likely.
