Bauer rebuts MediaWorks claim

Publisher is interested in radio, but says it isn’t in talks

Bauer Media is interested in buying radio assets, but insists it is not in talks to buy MediaWorks’ networks. Australia and New Zealand chief executive Paul Dykzeul is dismissing a media report that Bauer lodged an expression of interest with MediaWorks’ owner, Oaktree Capital Management.

MediaWorks owns TV3 and about half of New Zealand’s commercial radio stations, including The Edge, The Rock, More FM and RadioLive.

Speaking from Sydney, Dykzeul told me Bauer was not looking for TV acquisitions. There were no discussions on buying MediaWorks’ TV or radio assets, he said.

Sources say that, like MediaWorks’ previous owners, Oaktree wants to sell TV and radio assets. Would Oaktree consider splitting the two, if it could find a buyer for TV3?

Sky TV broadside

Sky TV chief executive John Fellet this week raised eyebrows with a broadside at news media, alleging bias in their coverage of the company. He linked that coverage to a legal dispute over the use of Sky sports clips by TVNZ, Fairfax, MediaWorks and Herald owner NZME, which Sky sees as a breach of copyright.

Fairfax and NZME have strenuously rejected the claim that editorial coverage of Sky has been influenced by the sports rights row.

The comments were out of character for a CEO who is popular with analysts for his breezy manner.

They followed a poor result for the 2016-17 financial year. Net profit is down 21 per cent and Sky lost 33,880 satellite subscribers.

All media face big challenges, and Fellet says: “I would rather be me than [chief executives] Kevin Kenrick at TVNZ or Michael Anderson at MediaWorks.” I asked him whether Sky had moved quickly enough from the traditional model of linear channels broadcast by satellite, to the new focus on internet streaming through websites.

“Subscribers are migrating to an on-demand world, but if we shut down Sky traditional today and went on-demand we’d go bankrupt,” he says.

“We have been moving that way with HBO programming [on the Neon service] and the development of Fan Pass.

“I don’t know what more we can be doing. A large percentage of our subscribers are very happy — so they are not going anywhere.

“Our box is still perfect for the traditional nuclear family.”

The foundation of Sky’s business model is the satellite service with its dominance of sports rights.

Under this structure, users need to pay for the basic package to get sports. Or they can use the Fan Pass offering.

With growing competition, Sky’s market share is bound to diminish, says Fellet.

“Netflix and Amazon are challenging, but they don’t make any money in NZ,” he says.

“Our model is just a straight pay TV play — which is difficult, but we still have a lion’s share of the revenue for the TV market,” Fellet says.

Doesn’t the future for Sky mean unbundling, given the fact that people don’t want to pay for basic channels they don’t watch?

Sky says Foxtel in Australia has done that, using lower cost “skinny” packages of 15 basic channels. But that has not worked, he says.

Sky faces a conundrum, in my view. It needs to make a big shift to the internet, while at the same time maintaining dividends for its investors.

Fellet says institutional investors recognise the need to invest in change, but smaller investors are not so understanding.