Nine Entertainment sells Stuff for $NZ1 in management buyout
Nine has finally offloaded its New Zealand business Stuff for just $NZ1, revealing it expects to book a significant cost related to the sale.
Nine Entertainment has sold its New Zealand print and digital media business to local management for just $NZ1 (93c), ruling off a tough 18 months across the Tasman after inheriting the business through the merger with Fairfax Media.
After months of on again, off again talks on the sale of the business, the business which trades under the name Stuff will be sold under a management buyout let by local CEO Sinead Boucher.
Ms Boucher plans to develop an ownership model that will give staff a stake in Stuff, which operates NZ’s biggest news website, nine daily newspapers including The Dominion Post and The Press and social media network Neighbourly.
Nine expects to book costs of up to $45m related to Stuff, which Fairfax bought for more than $1bn-plus nearly two decades ago during CEO Fred Hilmer’s reign.
That’s on top of specific items totalling $22.6m after tax relating to discontinued Stuff operations for the six months to December that Nine booked in February.
Nine CEO Hugh Marks said he was pleased with the sale, but made no mention of the difficulties in the NZ media market, with German-owned Bauer Media last month shutting its NZ magazine publishing operations and sacking nearly 240 staff.
“We have always said that we believe it is important for Stuff to have local ownership and it is our firm view that this is the best outcome for competition and consumers in New Zealand,” he said in a media release.
Stuff and others have been hurt by stiff competition and technology giants Google and Facebook carrying the news on their platforms without paying for the content.
Ms Boucher said the deal gives Stuff, as a wholly-owned NZ media business, far greater certainty as the industry battles through the coronavirus crisis, which has hit advertising revenue.
In a company-wide email to staff, Ms Boucher, who has been at the helm for nearly three years, said the new ownership model will “help us all achieve new heights for our readers and customers”.
“It will take some time to work through how best this might be structured, and I look forward to providing you with more information as we develop those plans,” she said in the email, seen by The Australian.
Like other NZ businesses, Stuff has been “badly affected by Covid-19, and we still have a tough job in front of us to build the business back up to a position of strength”, she warned.
“But, although advertising revenues were severely impacted by the lockdown, we also saw record demand from audiences for our journalism and our products.”
Under the deal, Nine will keep the Petone print plant site in Wellington, which will subsequently be leased back to Stuff. It will also receive 25 per cent of the proceeds from last week's sale of Stuff Fiber to telecom group Vocus for an undisclosed sum, and up to 75 per cent over the next three years, depending on the Stuff business’ ability to raise funding.
The surprise sale to Ms Boucher comes just weeks after Nine called off Stuff sale talks with New Zealand's dominant media company, NZME.
NZME, which owns Auckland masthead the New Zealand Herald and other media assets, had been seeking an interim injunction to "preserve the exclusive negotiation period previously agreed with Nine", but the NZ High Court rejected its application last week.
Nine on May 11 rejected NZME’s view, declaring that talks on NZME’s proposed purchase of Stuff were over. On the same day, Ms Boucher declared that the negotiations had ended the previous week.
After walking away from NZME, Nine was understood to be in talks with other potential Stuff buyers.
Nine and Fairfax had tried to sell Stuff for years, with the NZ Commerce Commission rejecting a merger between NZME and Stuff in 2017.
Nine expects the Stuff sale to be completed by the end of the month, and book an "associated specific item cost" of around $40-$45m in its 2020 financial results in August. Stuff booked a first-half underlying profit of $8m before specific items in February.
Following the completion of the merger in December 2018, Nine has sold Fairfax’s regional publishing operations, known as Australian Community Media, to Antony Catalano and Alex Waislitz for $125m. It has also carved up Fairfax’s events business, selling five major sporting events to Ironman Group for $31m.
Nine shares finished 7.3 per cent higher at $1.47 in a higher share market on Monday.
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