New Zealand's MediaWorks is working with Goldman Sachs (NYSE:GS) to conduct a strategic business review following a nearly $10 million loss for its 2022 fiscal year, announced on Wednesday, November 8, 2023. The review could potentially separate QMS, MediaWorks' out-of-home advertising business, from its radio operation, which includes popular music radio stations. The decision to enlist Goldman Sachs was made by MediaWorks' owners, Oaktree Capital Management and Quadrant Private Equity.
Despite the loss, the company reported a total revenue increase of 5.9% to $214.9 million and EBITDA of $34.4 million in the last fiscal year. However, operating costs escalated by 9.1%, driven by New Zealand's 7.2% inflation and increased investments in people and technology.
In light of the financial challenges, including a one-off impairment of $110.1 million due to the write-down of goodwill and realignment of asset value to global trends, MediaWorks CEO Wendy Palmer denied any plans for structural change or asset sales last month. Palmer emphasized the strength of their current structure and pointed out that their advertising business, with its 5500 outdoor touch points, could attract potential buyers like NZME and Lumo.
On Thursday, November 7, 2023, amidst rumors of sale and refinancing efforts, Palmer addressed these speculations as former CEO Cam Wallace stepped down. Despite "material uncertainty" about the company's future as indicated in the October annual report revealing a $125.9 million loss in 2022, decreased assets to $140.6 million, negative working capital of $19.4 million, and reduced cash balances of $12.7 million, shareholders expressed confidence in the company's future.
As part of cost-saving measures, amendments were made to banking covenants in the June and September quarters, and Today FM was discontinued. As MediaWorks navigates its financial struggles, the company's collaboration with Goldman Sachs for a strategic review marks a significant step in addressing its future direction.
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