APN shelves NZME float on weak ad market, puts Australian regional papers on block

See also: Canned NZME IPO no surprise to analysts

APN News & Media has shelved plans for an initial public offering of its NZME division in New Zealand due to a weak advertising market while at the same time putting its Australian regional newspapers up for sale as it wrestles with the growing importance of digital platforms.

The Sydney-based company reported a loss of $A10.2 million in calendar 2015, including a $A48.3 million charge against the Australian regional papers' mastheads, from a profit of $A11.5 million a year earlier. Earnings before interest, tax, depreciation and amortisation from continuing operations increased 1% to $A166 million, while revenue rose 1% to $A850 million, due largely to the media group's Australian Radio Network.

NZME, which publishes the New Zealand Herald newspaper and operates The Radio Network, posted a 3% decline in revenue to $433 million and an 8% decline in ebitda to $74.9 million. Advertising from its publishing division fell 4% to $179.6 million and circulation revenue declined 5% to $93.6 million. The radio unit's agency revenue dropped 11%  to $46.2 million and direct revenue was down 3%  to $72.4 million.

APN planned to list the New Zealand division, which has undergone an integration of the radio and publishing arms, but today said: "The advertising market environment is not currently conducive to an IPO and APN will not pursue this approach at this time."

Although the Australian media group said it wanted NZME to be appropriately funded to maintain its position in the New Zealand market, "there is a need to prioritise APN's strategic investments and focus on assets that will deliver the greatest shareholder return" and it "is actively considering its options for the business and will provide a further update to shareholders at the AGM in May."

As part of that shift in focus, the company announced plans to sell its portfolio of 12 daily and more than 60 non-daily Australian regional newspapers to let it focus on its digital growth strategy.

"APN has been a long-term supporter of regional publishing in Australia. However, our future investments must remain focused on growth assets and opportunities," chief executive Ciaran Davis said. "New ownership should give ARM the flexibility to invest where required to continue to provide quality news and content to its audiences, without having to compete for APN's capital."

The regional paper division posted a 27%  drop in ebtida to $A18 million on a 7% fall in revenue to $A188.5 million.

The company's Australian radio division was the best performer in the year, lifting revenue 22% to $A221 million for a 25% gain in earnings to $A82.8 million. Its Adshel outdoor advertising joint venture lifted revenue 8% to A$A159.5 million for a 4% gain in earnings to $A38 million.

The board didn't declare a dividend.

The dual-listed shares last traded at 55c on the NZX and 50Ac on the ASX.

(BusinessDesk)