Sky Network Television has confirmed speculation that it is looking at buying radio and outdoor advertising firm MediaWorks.
Photo: Supplied / Richard Parsonson
The pay TV operator said it was having "exclusive" talks about acquiring the remnants of MediaWorks from US private equity firm Oaktree and Australian media company Quadrant.
"The likelihood of a transaction proceeding is still highly uncertain with discussions and due diligence ongoing and incomplete," Sky said in a statement to the NZX.
It said if a deal were to be reached Sky TV would not need to raise new capital to fund the acquisition but it would have to go to shareholders for approval.
Sky said in February it was assessing opportunities to invest capital to accelerate the growth of the business, generate new revenue streams, and deliver improved returns for shareholders.
It said the possible acquisition of MediaWorks was consistent with this strategy.
Sky TV declined to provide further comment.
MediaWorks also confirmed it was in discussions with Sky TV and added they were ongoing and may not result in a deal. It also declined further comment.
Forsyth Barr senior analyst Aaron Ibbotson said Sky needs to strike a good deal with MediaWorks for it to make sense.
"It's going to depend on the price if I'm honest. To me, it doesn't quite fit with what I had in mind that Sky was focusing on at the moment, which was their TV offering, stabilising their core subscribers, satellite subscribers and also building out their on-demand offering and growing that.
"If they get it for a good price, I can see the rationale from a strategic perspective. From a financial perspective it needs to be a very attractive price I think for it to stack up."
Ibbotson said the main attraction of Sky buying MediaWorks would be building a larger advertising platform, combining TV, radio and outdoor advertising.
Last month there was speculation that Sky TV was a potential takeover target with talk that its bankers have tapped a couple of investment funds about a possible $500 million-plus buyout, with the company refusing any further comment on its strategy and outlook.
MediaWorks sold its television assets TV3 and Bravo to global broadcaster Discovery in 2020, leaving it with radio networks, including The Edge, The Rock, Today FM, and Mai-FM and the New Zealand outdoor advertising business owned by Quadrant
The Australian Financial Review said the talks came as MediaWorks' owners had also been considering an initial public offering for the business.
MediaWorks' most recent accounts filed with the Companies Office reported $NZ204m revenue for calendar year 2021, assets of $NZ266.7m and a net loss of $2.8m.
